COMMON QUESTIONS RELATED TO BANKRUPTCY
There are two
types of bankruptcies, Chapter 7 and Chapter 13. Featured are
some common questions related to both. We can teach you
alternatives that will help you
What does Chapter 7 Bankruptcy mean?
Also known as 'liquidation'. This type of bankruptcy
will wipe-out, or discharge all of your unsecured debts.
Chapter 7 is known as liquidation because any of your
non-exempt assets can be sold (hence liquidated) by the
trustee for the advantage of your creditors. Most Chapter 7
debtors have no non-exempt assets. Therefore no liquidation,
and unsecured debts are merely discharged. It is important
to note that there are specific unsecured debts that can not
be discharged in Chapter 7 bankruptcy.
It is important to note that there are certain
debts that are non-dischargeable when you file
How do I qualify for filing a Chapter 7 Bankruptcy?
In order to file a Chapter 7 BK, you have to qualify
under the Chapter 7 means test. The means test will first
compare your income with your state's median income. In the
event that your income is lower than your state's median
income, you are eligible to file for Chapter 7 bankruptcy.
On the contrary, if you earn more than you state's median
income, additional computations related to your income and
permitable expenses are needed to determine if you are
eligible for filing Chapter 7 bankruptcy.
How do I qualify for filing a Chapter 13 Bankruptcy?
Chapter 13 bankruptcy is a partial or full repayment
plan developed by the BK courts. A debtor will develop a
plan for approval and, when approval for the plan is
granted, they will remit monthly payments to their
bankruptcy trustee. In turn, the trustee makes payments to
the creditors in agreement to the terms of the plan. The
typical repayment time frame ranges from 3-5 years. At the
conclusion of the repayment period, as long as all payments
have been made according to the plan, the outstanding
unsecured, dischargeable debt can be discharged.
Who is Able to File Chapter 13 Bankruptcy?
For the simple fact that there is no means test, it is
usually simpler to qualify for Chapter 13 bankruptcy than
for Chapter 7 bankruptcy. In addition, some debtors who are
not eligible for Chapter 7 bankruptcy select to under
Chapter 13. However, under Chapter 13 you are going to be
required to earn a steady income so that you can create a
budget and remit reliable payments to your trustee.
Which type of Bankruptcy is Better?
It will depend on your specific situation. If you have a
great deal of unsecured debts, like doctor bills or credit
card debts, then Chapter 7 is better for you. Chapter 7 is
also better for you if you don't own much property, you have
a low income and the majority of your debts are unsecured.
If you have a regular income and non-exempt property that
you would like to hold on to, then a Chapter 13 bankruptcy
if your best option.
We suggest that you contact a local bankruptcy attorney and discuss your
situation. Or you can read more about
how to file bankruptcy on your own.
Is Bankruptcy Good or Bad?
Importance of Credit After Bankruptcy
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