Do you qualify to file bankruptcy? There are a few things you should consider when deciding whether you should file for bankruptcy. In most cases, Chapter 7 bankruptcy is for people who are unable to pay their debts. While this type of bankruptcy is meant for those who have no other option, some people do not qualify because of their high income. In order to qualify, you must earn less than the median income for your state, or meet the “means test,” which is an examination of your income and reasonable expenses. If you do, you’ll probably be discharged of most of your unsecured debts.
If you have significant income, Chapter 7 bankruptcy may not be right for you. However, you may qualify for Chapter 13 bankruptcy, which is more affordable and can cure your financial woes. In Chapter 13, your monthly disposable income is applied to your unsecured debts, and your unsecured creditors are paid a percentage of it. This type of bankruptcy lasts up to 60 months and helps you get back on your feet financially. The process is not as traumatic as filing for bankruptcy, but it can have a lasting effect on your credit score.
If you qualify to file bankruptcy, you must meet certain standards. According to the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, you must earn less than the median income of your state. If your income exceeds this amount, you may fail the Means Test, which requires you to prove that your income is significantly below the state’s median income. The law also sets strict guidelines for filing for bankruptcy, so you should consult a bankruptcy attorney before filing.
Generally speaking, most people qualify for Chapter 7 and Chapter 13 bankruptcy, as long as they have not filed bankruptcy within the past eight years. Additionally, you must have an income below the median income of your state for a family of your size. Higher income may qualify you for Chapter 7 and Chapter 13 bankruptcy, but you may have to meet the “means test” requirement. However, even though Chapter 13 bankruptcy is more expensive than Chapter 7, it is still usually easier to qualify for it than Chapter 7.
Oftentimes, people who are injured in an accident can’t work. Even if they get settlements, their income doesn’t cover all of their expenses, and credit card payments can become severely behind. This is especially true if you have to pay for living expenses during your recovery period. In this case, your credit card payments may have fallen behind, which is when you needed a bankruptcy attorney. Your lawyer will ensure that your debt relief is successful.
Often times, people who are not able to afford Chapter 7 or Chapter 13 bankruptcy will be better off with Chapter 13. With this option, you can pay off your creditors through a repayment plan that is tailored to your income and monthly expenses. The repayment plan is typically three to five years long. After that, the remaining debt is discharged, and your debts can be consolidated in a single, manageable payment. With this option, you’ll have more time to pay off your debt and move on with your life.