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DON'T ASSUME YOU DON'T QUALIFY FOR BANKRUPTCY!

Many persons exploring bankruptcy for themselves learn that their household incomes are compared to the "median income" to determine their eligibility for a Chapter 7 bankruptcy.  While this is true, it does NOT mean that all people who earn more than the median income fail to qualify for Chapter 7. In fact, our experience shows us that a majority of higher income debtors do qualify.

In Iowa, between 90% and 95% of all consumer bankruptcy filings are Chapter 7 bankruptcies. Clearly, Iowans prefer Chapter 7. And for good reason. Chapter 7 is quicker (about 4 months compared to 3 to 5 years for a Chapter 13). It is more certain of success (most Chapter 13 cases never complete, for a variety of reasons). It is less costly, because you make no payments to the court to pay your unsecured creditors. These are just a few good reasons out of many to prefer Chapter 7.

So why do higher income debtors often qualify for Chapter 7? The answer is usually found in the unique facts of their cases. Most people visit with a bankruptcy lawyer only when they cannot pay their debts. Perhaps they have run into unusually high expenses of some sort. Maybe they are supporting several family members. There can be about as many different reasons as there are people considering bankruptcy. Our job as lawyers is to figure out what reasons you have for being unable to pay your bills, and whether those reasons will be accepted by a bankruptcy judge. Our advice may be that you should not file a Chapter 7 case. But our experience has shown us that most of our clients will qualify for Chapter 7.

Several of our clients have come to us after consulting other attorneys, who concluded with little analysis that they would not qualify. In several cases, when we have analyzed those cases in detail, we found those clients would qualify, and we filed those cases as Chapter 7 cases and were successful. So do not jump to conclusions. If you would prefer a Chapter 7, do not give up on that goal until a detailed analysis is performed. To analyze your case, we need your past 7 months of pay stubs at the very least. Gather those pay stubs and talk to us about what else we might need.




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