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Bankruptcy - Chapter 13 or Chapter 7 What are the exceptions for Chapter 7 when you "make too much"?

#1 User is offline   Karla S 

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Posted 20 July 2011 - 04:13 PM I am seeking legal counsel to navigate a possible bankruptcy and have an appointment next week. But, just to get some advice - I just had a condo foreclose - which really gets me mad because there was an active short sale approved by the bank and under contract when at the last minute the bank decided not to extend the foreclose date. They missed out on tens of thousands of dollars they could have gotten vs. going to auction. If a bank decides not to go through with a sale where they could get more $$ than an auction, they shouldnt be allowed to come back and collect on that! But, that's for another time...

Anyways, my condo foreclosed. So, I am looking into bankruptcy. I couldn't afford the mortgage payments and that's why it eventually foreclosed. Now, I find that I may not be able to file Chapter 7 because I make too much money. Hello?!??! If I made enough money I wouldn't have to file bankruptcy!

I have read that I must have less than $6,000 in disposable income for 5 years (total) to qualify for Chapter 7. If I have between $6k and $10k then I must not be able to pay 25% of my total debt in 5 years. And, if I have over $10k I can't file Chapter 7 at all.

My question is, if I have more than $10k disposable income over 5 years, but I cannot pay 25% of my debt, can I still qualify for Chapter 7?

Here's the scenario:

Combined net income monthly = $6600
Total Debt (not including new home and cars to keep) = $255,000 (credit cards, personal loan and foreclosed condo)
Total Monthly Expenses = $5600
Total Disposable Monthly Income (according to IRS) = $1000

I live in Washington State. Any thoughts??


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