For many people, it only takes a few weeks for debt to go from a manageable part of daily life to a disaster. Anything from getting into an accident to suddenly falling ill can have a dire financial impact when you have outstanding debt to pay.
Once you miss a few payments, you may find yourself dealing with massive penalties from your creditors, higher interest rates and fees that add up quickly. After you fall so far behind that you can no longer make the necessary payments, it is almost inevitable but you will need help to manage your debt. Although many people are quick to dismiss bankruptcy, it is actually one of the best options available for those with substantial unsecured debt.
Unsecured debts are debts that do not have collateral. A mortgage is a secured debt, with your home serving as the security for the loan. Unsecured debt can be credit card debt, medical debt or even debts racked up at department stores. For many people, Chapter 7 bankruptcy may be the best way to deal with those outstanding debts. However, individuals must qualify for Chapter 7 bankruptcy.
To file for Chapter 7 bankruptcy in Connecticut, you must pass a means test
The laws that offer bankruptcy protections to consumers also have protections for businesses. One of the ways that the government protects businesses with bankruptcy law is by placing limits on how much money someone can make or how much they can retain in terms of existing assets. The income limit is often referred to as a means test.
You will need to fill out some complicated paperwork, particularly if your level of income is very close to the state average. For those whose income is drastically below the state median income, qualifying for Chapter 7 is quick and straightforward. For those with income levels that approached the state median, more care must be taken in handling the means test.
It is still perfectly possible for individuals to qualify for Connecticut Chapter 7 bankruptcy even with middle-class incomes. For a single individual, the income cap is $63,564. For a household with two individuals, that amount goes up to $81,604. Families of three can make up to $98,432, while families with four could bring home $114,110 and still qualify for Chapter 7 bankruptcy.
The benefits of Chapter 7 bankruptcy outweigh the complications
While the idea of scrutinizing your income in determining if you qualify for Chapter 7 bankruptcy may sound overwhelming, the benefits to filing far outweigh the difficulties involved.
If you qualify for Chapter 7 bankruptcy and the courts approve your petition, you will receive not only an automatic stay that protects you from creditor collection activity but also a discharge of your unsecured debts that will permanently absolve you of the legal requirement to repay them.
If you find yourself struggling to make ends meet because of substantial debt, it may be time to determine whether Chapter 7 bankruptcy is the solution you need.