Can I File Bankruptcy?
Bankruptcy is designed to eliminate debt and stop collection—but could it help you?
The two main types of personal bankruptcy are Chapter 7 and Chapter 13.
Both types of bankruptcy usually include the protection of the automatic stay, which is a legal order that stops collection efforts and creditor harassment.
Read on to learn more about personal bankruptcy, then fill out the free bankruptcy case evaluation form on this page to ask a bankruptcy lawyer about bankruptcy.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy is often called a “total bankruptcy” because it has the power to completely eliminate certain debt.
This means that after the debt is discharged through a Chapter 7 filing, the filer is no longer responsible to pay that debt—ever.
Sounds good, huh? Before you ask yourself, “Can I File Chapter 7 Bankruptcy?”, read on to learn more about the process.
Only unsecured debts can be eliminated through Chapter 7. Unsecured debts are debts that are not tied (secured) to property, such as:
- Medical Debt
- Credit Cards
- Utility Bills
- Payday Loans
- Some Personal Loans
- Parking Tickets and Many Other Fines
Because Chapter 7 bankruptcy involves the total discharge of unsecured debt, not everyone is allowed to file it.
Read on to see if you may be allowed to receive debt relief through Chapter 7.
Can I File Chapter 7 Bankruptcy?
You must pass the Chapter 7 bankruptcy test (also called the “means test” in order to file Chapter 7.
The means test compares your income to the median income of a family of your size in your state.
If you make less than the median income level in your state, you will likely “pass” the test and be allowed to file Chapter 7 bankruptcy.
If you make more than the median income level in your state, don’t’ panic—you may still be allowed to file Chapter 7. There is a “second chance” part of the test that re-determines your ability to file.
The second phase of the test (which you don’t have to worry about if you already “passed” the first phase) examines your disposable income over the next five years.
If it’s less than $6,000, you typically “pass” the means test and can continue on to file Chapter 7.
If you don’t qualify to file Chapter 7 bankruptcy, you may still be able to file bankruptcy under a Chapter 13 bankruptcy repayment plan.
The Chapter 13 Bankruptcy Option
Chapter 13 bankruptcy was designed to stop collections, foreclosure and repossession to give people time to catch up on their secured debt (debt tied to property).
This type of bankruptcy sets debtors up on an interest-free repayment plan, which usually lasts three to five years.
Under the plan, the debtor makes one monthly payment directly to the bankruptcy court. The filer does not deal directly with creditors.
As long as people stick to the payment plan, collections (including foreclosure proceedings) are typically stopped.
If all payments are made on time, many debtors are allowed to discharge the rest of their unsecured debt.
Can I File Chapter 13 Bankruptcy?
If you’re facing foreclosure or repossession and are looking for some extra help in repaying your bills, Chapter 13 may be a viable option for you.
Keep in mind, a filer must have steady income coming in so he or she can keep up with the repayment plan.
Ask a local bankruptcy lawyer if the Chapter 13 bankruptcy repayment plan could work for you and answer the question: “Can I File Chapter 13 bankruptcy“?
Ask a Bankruptcy Lawyer if You Can File Chapter 7 or 13 Bankruptcy
A local bankruptcy lawyer may be a great resource to talk to about whether or not you qualify to file bankruptcy.
Fill out the free bankruptcy evaluation form on this page to connect with a sponsoring local bankruptcy lawyer today.
Don’t let debt define you. Find out if you can eliminate debt through bankruptcy.