Do I Qualify for Bankruptcy?
Bankruptcy is an excellent answer to financial problems, but whether or not it’s good for you is another subject. Qualifying for bankruptcy requires several different factors. There are two main types of bankruptcy that individuals and couples file: they are Chapter 7 bankruptcy and Chapter 13 bankruptcy.
Chapter 7 bankruptcy is called the “debt liquidation” bankruptcy because the debtor keeps most of his possessions while liquidating all of his debt. Unsecured debts – like credit cards, student loans and medical bills – are discharged, meaning the debtor never has to pay those debts.
Under a Chapter 13 bankruptcy, debts are reorganized and then separated into monthly payments that the debtor can actually pay. This continues over a period of three to five years and is a good option for debtors who are employed.
The Bankruptcy Means Test
Chapter 7 bankruptcy can only be filed after taking a means test, which compares your income with the median income of your state, for a family of your size. If your income falls below this figure, you qualify for Chapter 7, if it’s too high then Chapter 13 is a possibility.
Engel Law Firm is a full service bankruptcy firm helping clients with debt relief, alternatives to bankruptcy, credit restoration and much more. Contact us today and start getting expert advice on your financial challenges!