Filing for bankruptcy can be a difficult decision. It’s important to know if you’re eligible and what type of bankruptcy you can file for. This blog post will give you an overview of the eligibility requirements for the most common types of bankruptcy.
There are two common types of personal bankruptcy: Chapter 7 and Chapter 13.
To be eligible for either, you must first complete a means test. The means test is used to determine whether your income is low enough to qualify for Chapter 7 bankruptcy. If it is, you may be able to wipe out all of your debt in a matter of months. If your income is too high for Chapter 7, you may still be eligible for Chapter 13, which allows you to repay your debts over a three-to-five-year period.
To complete the means test, you’ll need to gather several documents, including your most recent tax return, pay stubs, and bank statements. Once you have all of the required documents, you can complete the means test online or with the help of an attorney.
Difference between Chapter 7 and Chapter 13
Chapter 7 bankruptcy is known as “liquidation” bankruptcy because it involves the sale of your nonexempt assets to repay your creditors. Once your assets are sold and your debts are paid off, your remaining debts are discharged. You no longer have to pay them.
Chapter 13 bankruptcy is known as “reorganization” bankruptcy because it allows you to reorganize your debt and develop a repayment plan.
Under this type of bankruptcy, you don’t have to sell your assets. Instead, you make monthly payments to your creditors over a three- to five-year period. Once you’ve made all of the required payments, the court discharges your remaining debts.
Which Type of Bankruptcy Is Right for You?
The type of bankruptcy that’s right for you depends on many factors, including:
- Type and amount of debt you have
- Whether you’re behind on your mortgage or car payments
- Whether you have any nonexempt assets the trustee could sell in a Chapter 7 bankruptcy
An experienced bankruptcy attorney can help you determine which type of bankruptcy is right for you based on your unique circumstances.
Your attorney will review your financial situation and help you determine if filing for bankruptcy is right for you.
Deciding whether or not to file for bankruptcy is a difficult decision. If you’re considering bankruptcy, it’s important to know if you’re eligible and what type of bankruptcy you can file for.
If you still have questions about your eligibility, consider speaking with a bankruptcy attorney. They can review your financial situation and help you determine if filing for bankruptcy is right for you. For more information or to schedule a consultation to discuss your situation with an experienced debt settlement lawyer, contact the Law Offices of Robert M. Geller at 813-254-5696.