Indianapolis, Indiana Chapter 7 Bankruptcy Attorneys

Despite what credit card company propaganda says to the contrary, most people who file for Chapter 7 bankruptcy do so because no other choice will work.

At Redman Ludwig, P.C., in Indianapolis, our bankruptcy attorneys have been helping the people of Central Indiana — individuals, families, and business owners alike — find solutions to difficult financial problems for 30 years. And while our clients over the years have always had many questions to ask and misconceptions to address, the recent changes to the U.S. Bankruptcy Code have created more of them than ever before.

The Chapter 7 Bankruptcy Means Test

The Chapter 7 means test is nothing more than a boogeyman. It forces a handful of the people who would have qualified for Chapter 7 bankruptcy under the old laws to file for Chapter 13 instead. The test has two parts. First is the "median income" test. In the median income test, your prior six months of income is compared to the median (not the average, but the middle point on a graph) monthly income for same-sized households in Indiana. If your income is below that median, you qualify for Chapter 7 bankruptcy. If not, the second test is applied. In the second test, your disposable income (income beyond what you reasonably need to live on) over the next five years is measured. If your disposable monthly income over a period of 60 months is sufficient to pay a dividend to your creditors of a certain percentage you may still qualify for a Chapter 7 bankruptcy.

What a Chapter 7 Bankruptcy Can and Cannot Do

Chapter 7 can wipe away unsecured debt such as credit card debt, most personal loans, and medical bills to name a few. It will also put an end to creditor harassment and wage garnishment. For your part, you will have to give up any non-exempt personal property and assets to the court-appointed Trustee. The Trustee will liquidate those assets to pay your creditors. Don't worry that you'll have to give up everything you own. Most people who file for Chapter 7 will not have any non-exempt assets or property and it is not likely that you will either.

Chapter 7 cannot save you from home foreclosure or car repossession unless you "reaffirm" your mortgage or car loan in the process. This means you have to agree to make up any deficiencies (back payments) immediately and continue making your regularly scheduled payments on time. If you think that you cannot meet these conditions and want to keep your house or car, then Chapter 13 may be your best option. Likewise, Chapter 7 will not get rid of every debt. It will not get rid of a tax debt for taxes less than three years old. It will not get rid of student loans. It will not absolve you of domestic support obligations such as child support or alimony.

Central Indiana Bankruptcy Solutions — Toll Free (866) 793-5226

For answers to other questions you have about the Chapter 7 bankruptcy process — call our lawyers in Indianapolis or reach us online by completing the brief form located on the contact us page of this Web site. We offer reasonable payment plans and will deduct initial consultation costs from your fee should you decide to retain us.

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