If you are drowning in debt, bankruptcy could be your lifeline?
What types of bankruptcy are there?
Chapter 7 – A Fresh Start
Chapter 7 bankruptcy’s are known as no acid bankruptcies. The result of a successful case is that your debts are “discharged” or “wiped out.”
There are income and asset requirements to qualify for a chapter 7 bankruptcy. Do I qualify?
Not everyone is eligible to file a Chapter 7 bankruptcy, so today I want to talk to you about the list of criteria that qualify you to file for a Chapter 7 bankruptcy.
- You must pass the bankruptcy “means test” This test compares your income to the “median” income in your area. If you make too much money, the government thinks you should have money to pay off your debt.
- You must be an individual, married couple or business owner. Corporations cannot file for Chapter 7 bankruptcy
- You have not had a recent bankruptcy discharge or dismissal. Bankruptcy law prevents people from repeatedly running up debts and having them discharged. You can only file for Chapter 7 bankruptcy every 8 years.
- You must receive credit counseling. Most bankruptcy credit counseling services are available online.
There are some types of deaths that cannot be discharged such as child support obligations, fraud, some tax debt and judgments related to fraud.
A Chapter 7 bankruptcy takes between 3 to 4 months to complete and they are relatively inexpensive
Chapter 13 – Re-Organization
The next most common type of bankruptcy is a chapter 13 bankruptcy. If you don’t qualify for a chapter 7, filing bankruptcy under chapter 13 may be right for you.
In a Chapter 13 bankruptcy, you create a court supervised three to five year repayment plan.
Chapter 13 plans are a good solution for people in the following situations:
- You have fallen behind on your mortgage
- You want to protect your home from foreclosure
- You owe back taxes and need time to repay them
- You have significant equity in your home
- You owe other back child support
Is bankruptcy right for me?