If you are faced with bankruptcy, chances are it’s been a long, tough road. The last thing you want to do is complicate the issue by trying to handle bankruptcy on your own. A bankruptcy lawyer can make the process run more smoothly while answering some of the questions you have. This might include whether you should file chapter 13 or chapter 7 bankruptcy. The following is some information about both to help get you started on the right track.
What Is Chapter 7 Bankruptcy?
People refer to chapter 7 bankruptcy as “liquidation bankruptcy.” During this process, most of your property will be liquidated, or sold, so the funds can pay off any debts you have. If you have a limited income, you’ll most likely file for chapter 7 bankruptcy because you won’t have the ability to pay back your debts on time, which will make the late fees begin to multiply and the whole situation will get out of control. Eligibility for chapter 7 goes as follows.
- Your household income falls below your state’s median income.
- If your household income is not below that median, a “means test” will need to be passed.
- You have no disposable income.
What Is Chapter 13 Bankruptcy?
People refer to chapter 13 bankruptcy as “reorganization bankruptcy.” During the process of chapter 13 bankruptcy, your property will not be sold. Instead, the court will come up with a plan for you to reorganize your finances and pay back some or all of your debts. When you have completed the plan set forth by the court, any remaining debt will typically be discharged, meaning you won’t have a responsibility to pay it back. If you have a secure income with money to spare, and a simple budget could help you get your debts in order, this might be the type of bankruptcy you’d file for. Eligibility goes as follows.
- You have a regular income.
- Your unsecured debt totals fall below $394,725.
- Your secured debt totals fall below $1,184,200.
How Does One File for Bankruptcy?
Perhaps the best way to file for bankruptcy is by speaking with your attorney. Someone who specializes in bankruptcy can best help you figure out which type of bankruptcy you can file for, as well as how to work through the process. You’ll have a series of documents to complete and file with the court. If you are filing for chapter 13, a bankruptcy trustee who is appointed by the court will look over a repayment proposal you must submit.
Getting Started With Bankruptcy
Dealing with bankruptcy is no small matter, so it’s important you have someone on your side. Contact a bankruptcy lawyer to get started with the process.
