The most common form of personal bankruptcy is found under Chapter 7 of the United States Bankruptcy Code. Chapter 7 bankruptcy is best associated with wiping out various unsecured personal debts such as credit cards, medical bills, and utility shut offs. But Chapter 7 personal bankruptcy is not for everyone and a debtor must pass some eligibility prerequisites in order to obtain Chapter 7 bankruptcy relief.
Let’s take a look and see if former President Trump would qualify for personal bankruptcy protection under Chapter 7 of the US Bankruptcy Code. In order for a debtor to qualify for Chapter 7 bankruptcy, he or she must pass two prerequisite tests. The first test, and the more stringent test, is called the Means Test. The Means test essentially defines a limit on gross household income based both on family size and location. Donald Trump is married and has one minor son, Barron Trump, thus making this example of family size of three (3). The family presently resides in Mar-A-Lago, a resort and national landmark in Palm Beach, Florida. Per the US Department of Justice Means Test requirements, a family of three in Florida must have a gross household income not to exceed $70,815.00 per year. While we never got access to the former President’s income tax returns, it seems safe to assume that the family grosses more than $70,815.00 annually, thus likely disqualifying him from personal bankruptcy relief under Chapter 7 of the US Bankruptcy Code. For those of our readers who may be wondering, the gross household income ceiling for a similar family size in Ohio is $78,059.00.
The other considerations for chapter 7 bankruptcy eligibility are a household budget test and a close consideration of asset liquidation risk. While it would be nearly impossible to determine Donald Trump’s household budget, it may be safe to infer that the former President has assets which may be at liquidation risk if he were to somehow qualify for relief under Chapter 7 bankruptcy.
So, what options may the former President of United States have, in terms of personal bankruptcy relief? While Chapter 13 bankruptcy (debt consolidation/repayment plan) would be part of the discussion, it is most likely that due to the massive size of his personal and business assets and other holdings, Chapter 11 bankruptcy would be the most likely alternative. Chapter 11 bankruptcy generally provides for reorganization, usually involving a corporation or partnership. It is also a common form of relief for mega Hollywood stars and famous athletes. Former NFL quarterback filed for Chapter 11 bankruptcy in 2008.
One final point to be illustrated in this article is that not all debtors qualify for Chapter 7 bankruptcy relief. In the greater Toledo, Ohio area, about 9 out of 10 personal bankruptcies are Chapter 7 bankruptcies, thus opening the door to the elimination of personal unsecured debts such as credit cards, medical bills, utility bills, vehicle repossessions, and much more.
If you or someone you know is interested in learning a bit more about filing personal bankruptcy, be sure to schedule a meeting with a qualified local bankruptcy attorney. Personal bankruptcy attorney Scott France has helped many Northwest Ohio and Southeast Michigan residents file for relief and achieve a fresh start. Maybe it’s your turn for a fresh start. Begin by checking out the Bankruptcy FAQs page on the France Law Group website.