Understanding who can file for bankruptcy can go a long way toward informing you of your options when you have financial issues. It is important to keep in mind that bankruptcy should really be turned to as an absolute last resort for getting out of debt. Here at LeBaron & Jensen, we strive to provide a multitude of services to inform you whether bankruptcy is the best option for you and to help guide you through the bankruptcy process.
When to File for Bankruptcy
As previously stated, bankruptcy is a final resort after you have tried other options for getting out of debt. You should only file for bankruptcy after you have tried to negotiate a repayment plan with your creditors. If they refuse to work with you to form a repayment plan that you will be capable of paying, you may want to consider filing for bankruptcy. When your liabilities exceed your assets, bankruptcy may be the best option. If you find that you are going further into debt every month, it is important to take action to get out of debt. In addition, it is often a good idea to look into bankruptcy if you can’t see your financial situation improving over the next 5 years.
Who Can File for Bankruptcy?
In general, anyone is able to file for bankruptcy. However, there are certain requirements for the various types of bankruptcy. You will only be able to file for that particular type of bankruptcy if you meet all of the relevant requirements. If you are filing for bankruptcy as an individual, rather than as a business, you will most likely be eligible for either a chapter 13 bankruptcy or a chapter 7 bankruptcy. Keep in mind that your bankruptcy case may be dismissed by the court if they feel that you are trying to cheat your creditors. These cases may also result in persecution for fraud.
Who Can File for a Chapter 7 Bankruptcy?
A chapter 7 bankruptcy can’t be filed for another 8 years after a previous chapter 7 bankruptcy has been filed. Only individuals may be eligible for a chapter 7 bankruptcy, businesses will most likely have to file for a chapter 11 bankruptcy. In addition, you will not be eligible to file for a chapter 7 bankruptcy if you have had a bankruptcy case dismissed by the court in the previous 180 days. To become eligible for a chapter 7 bankruptcy, your current monthly income will be examined closely. Your monthly income will be determined based on your prior 6 months’ income. This income will be paralleled against the average income for a family of a similar size as your family. If your monthly income is less than or equal to the median income for a family the identical size as yours, you are most likely eligible to file for a chapter 7 bankruptcy. However, if your monthly income is more than the average, you will be required to meet the means test.
The Means Test
The means test is a test that examines your finances in order to determine which type of bankruptcy you are eligible for. This test determines if you have enough disposable income in order to repay at least a portion of your unsecured debts. Your disposable income is the amount of money that you have remaining after you have subtracted certain allowed expenses and required debt payments from your monthly income. If you do have a substantial amount of disposable income, it is likely that you will be required to file for a chapter 13 bankruptcy rather than a chapter 7 bankruptcy.
Who Qualifies for a Chapter 13 Bankruptcy?
A chapter 13 bankruptcy is often referred to as the “wage earner’s bankruptcy.” It is available only to individuals or married couples filing together, not to businesses. In order to qualify for a chapter 13 bankruptcy, you must have a steady source of income. In addition, there is a limit to your debts to qualify for a chapter 13 bankruptcy. Your unsecured debts are required to be less than $394,725. In addition to this, your secured debts must total an amount less than $1,184,200. This specific number is adjusted every 3 years in order to account for inflation. You are not able to file for a chapter 13 bankruptcy within a certain period of time following a previous bankruptcy or within 180 days of having a previous case dismissed.
What Debts Can’t Be Wiped Out by Bankruptcy
There are certain debts that can’t be resolved through the use of bankruptcy. Understanding which types these are can help you to decide if bankruptcy is the best approach for your particular situation. Student loans and debts to government agencies can’t be wiped out by bankruptcy. Alimony and child support payments are also not able to be resolved with bankruptcy. Other debts that can’t be wiped out by bankruptcy include income taxes, court fines or penalties, and debts for personal injuries that were caused by you driving while intoxicated.
Debts that May Be Wiped Out by Bankruptcy
Alternatively, there are many types of debt that are able to be wiped out with bankruptcy. A few of these types of debt include personal loans, credit card debt, lawsuit judgements, medical bills, and obligations from leases or contracts.
Reasons to File for Bankruptcy
There are several reasons that commonly lead to filing for divorce. Medical debt is a common thing that causes individuals to file for bankruptcy, especially because medical issues can also lead to job loss. Being sued by creditors, job loss, and divorce are all reasons that many people decide to file for bankruptcy. Keep in mind when you make this decision that it will have a long-term impact on your credit and personal life, though there are still a few benefits to bankruptcy in the right situation.
Here at LeBaron & Jensen, we strive to provide you with superior guidance to help you throughout the bankruptcy process. Our skilled team is experienced in each step of the process in order to ensure that you are able to obtain the best possible outcome. To learn more about the legal services and guidance that we are able to provide and how they can improve your bankruptcy process, contact our experts today!