With the enactment of the Bankruptcy Abuse and Consumer Protection Act of ("BAPCA"), bankruptcy debtors are now required to pass a "means test" in order to qualify for Chapter 7 bankruptcy. Read on to learn more about whether you qualify to file for Chapter 7 bankruptcy. For more information, see The Chapter 7 Means Test. Passing the Means. Oct 24, · You do not need to wonder anymore if the answer to “Do I qualify for bankruptcy” is yes or no. Do I Qualify for Bankruptcy if I Have a Job? Another qualification for receiving a bankruptcy discharge under Chapter 7 is an income requirement. If you are asking “Do I qualify for bankruptcy even if I have a job,” the answer is maybe. Alternatives to Filing Chapter 7 Bankruptcy. If you are wondering if you should file for bankruptcy, there are many nonprofit consumer credit counseling organizations that have the ability to negotiate more favorable terms with karacto.xyz’s particularly effective with credit-card companies. The repayment program will be managed expertly and fees could be avoided.
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The funds generated by the liquidation of these assets are used to pay creditors. Under Chapter 13, the debtor reorganizes assets and establishes a payment plan for settling debts through the court system.
The payment plan is set up for a particular period of time — typically three to five years, and is income based. The qualifications for bankruptcy were previously quite lax. Under the current law, individuals must undergo a rigorous accounting process which includes the examination of all living expenses, income, assets and debts.
If the individual is truly unable to pay off debts owed, then he or she qualifies for bankruptcy under one of these two chapters. A bankruptcy attorney will be able to determine, based on the means test, whether you qualify for filing Chapter 7, Chapter 13, or both chapters. If you qualify for both, you will need to decide which chapter you should file and a bankruptcy lawyer can educate you on the differences in order to help you make the right decision for you and your specific circumstances.
Provided you meet the bankruptcy eligibility standards under the means test, you qualify for Chapter 7, regardless of the amount of debt you have. Chapter 7 is designed to discharge unsecured debt, or debt in which you did not have to put up any collateral in order to get credit. Examples of unsecured debt include medical bills, credit cards and utility bills.
It is important to realize that under Chapter 7, you will lose property, which may include your home. Your bankruptcy attorney will provide you resources for completing these required courses. In order to file for Chapter 13, you must meet the eligibility standards, including passing the means test. You must also have a combination of secured and unsecured debt.
Chapter 13 is designed to allow debtors to consolidate bills and make a single payment through the bankruptcy trustee to pay off creditors. This form of bankruptcy allows you to keep some of your property, like your car and your home, while still getting a fresh start by wiping out much of your debt. You must additionally complete a pre-filing credit counseling course and a post-filing debtor education course, just as those filing Chapter 7 are required.
Your bankruptcy attorney can assist you in locating approved courses for satisfying these requirements. Other Chapters of Bankruptcy While most individuals are perhaps the most familiar with Chapter 7, Chapter 13 and possibly Chapter 11 Bankruptcy, there are other chapters under the law.
How to Deal With Debt. Managing Your Debt Reducing Debt. Full Bio Follow Linkedin. Follow Twitter. LaToya Irby is a credit expert and has been covering credit and debt management for The Balance for more than a decade. Read The Balance's editorial policies. You must pass the bankruptcy means test.
You are an individual, married couple, or small business owner. You are an individual You are married and filing jointly with your spouse You are a sole proprietor and have personal liability on some business debts You are half of a business partnership with someone other than your spouse and which to file bankruptcy on those business debts that you have personal liability.
You have not had a recent bankruptcy discharge. You have not had a recent bankruptcy dismissal. You must receive credit counseling. Get an attorney's advice.