Qualifications for Bankruptcy
There is no cut and dried answer to the question of what are the qualifications for bankruptcy. Because there are different types of bankruptcy there are four different sets of qualifications to consider. For individuals and married couples there are only two types they might qualify for, Chapter 7 or Chapter13. Chapter11 is strictly designed for businesses and Chapter 12 is only for families that own and operate farms.
A lot of people ask do I qualify for bankruptcy. Each case that is filed is unique. There are some guidelines you have to meet in order to even file though.
Chapter 7 is the discharge of all debts. This means a creditor can no longer sue you or even harass you about money you owed to them prior to your filing. These creditors will no longer be able to repossess or threaten repossession of any properties that is included in the filing. Before a person can file for Chapter 7, they have to pass a” Means Test” determining their current income. They will take into consideration the income you have had during the six months prior to filing. The income is judged against the current median income for individuals with the same size families as yours, living in the same state as you. If your income level is at or is above the normal median income in your state for your family size you will have to file Chapter 13.
Bankruptcy qualifications are determined by federally mandated laws. Should the laws of your state disagree with any federal bankruptcy ruling the federal law is always followed. When a person files they are required to provide the court with a list of all their creditors. This list must include the names and addresses of each creditor. The list must also include the exact amount that is currently owed to the creditor.
The filers must also provide the court with accurate personal information. The court requires you to disclose an itemized statement including all your assets. This statement must list any and all savings accounts, personal properties and investments you may have. Then you have to tell the court your source of income at the current time and the exact amount you have coming into the household each month. The court will want to know the size of the family that is living on this income and the exact monthly expenses that you have to provide for the family. Things like how much you pay in rent, insurance for your car, food, electricity, gas and other utilities will be considered as expenses. They also take into consideration how much it costs you to travel to and from your place of employment.
They may also consider how much of your income is disposable income that means how much money you actually have left after paying all your living expenses. If your disposable income is $6,000 or less you qualify, however if your disposable income is more than $10,000 you may have to file Chapter 13.
Persons wanting to file for Chapter 7 or any Chapter must receive credit counseling at some point in the six months prior to their having filed. The attorney handling your case will set this counseling up for you. The counselor will gather all the financial information pertaining to you and will actually help you decide if you are qualified to file for Chapter 7 or if you will need to file for Chapter 13. When you have completed the credit counseling the counselor will provide you with a certificate of completion for the counseling. You will file this certificate along with your petition to file bankruptcy. If you can prove to the court that you had a very good reason for being unable to attend credit counseling in the six months prior to filing for Chapter 7 the court may allow you to file on the promise that you will get credit counseling in the near future.
To actually determine your eligibility you have to get legal advice. The laws regarding this matter can be complicated and hard to understand. An attorney who works on these types of cases can help you do all the right things, so that this matter is resolved as painlessly as possible.
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