Who is eligible for bankruptcy protection?
Whether you have been hit with a debilitating medical bill or suffered a job loss, bankruptcy can be a lifesaver. However, in order to file for bankruptcy you must first qualify. This can be done by taking a look at your current monthly income, as well as the disposable income you can have left over after subtracting the required debt payments.
Chapter 7 and Chapter 13 bankruptcy
A means test can be conducted to see if you qualify for bankruptcy. The means test compares your disposable income to the average monthly income of a typical family in your state. If you qualify, then you can get your debts discharged in a Chapter 7 bankruptcy. This type of bankruptcy is designed to wipe out most unsecured debt. If you qualify for Chapter 13 bankruptcy, your debts will be reorganized into a payment plan.
Getting help from a bankruptcy lawyer
A bankruptcy lawyer can help you determine which type of bankruptcy you qualify for. Chapter 7 is a good option for people who are facing foreclosure or repossession of a vehicle, or who are behind on their mortgage payments. This type of bankruptcy is also good for people who want to keep their homes. However, this type of bankruptcy is only for individuals and not businesses.
Those who qualify for bankruptcy can benefit from a variety of tools and services. These include bankruptcy schedules that show you how much money you make in a month and bankruptcy means tests to determine whether your disposable income is high enough to pay your unsecured creditors. You may also qualify for Chapter 12 bankruptcy, which is the same thing as Chapter 7 but is only for family farmers, fishermen, and other agricultural-based businesses.
Income level
In some states, you must have a certain income level to qualify for a Chapter 7 bankruptcy. This level is based on the average income of a family with four or more people in the state. The income level must also be lower than the state median income for the same household size. If you have more income than the median income, then you may be eligible for Chapter 13 bankruptcy.
If you qualify for Chapter 7 bankruptcy, then you can keep most of your assets. The assets you keep can be secured, such as a home, vehicle, or furniture. Unsecured debts are those that are not secured by collateral, such as credit card balances. This type of bankruptcy also has the benefit of preventing repossession and foreclosure. However, it does not eliminate reaffirmed debts.
Things to consider
There are other things to consider before filing for bankruptcy. For example, it is important to report collection activity to your creditors. Some creditors are prohibited from approaching you. Also, lenders might not approve you for a loan if you file for bankruptcy. This can be an intimidating situation, especially if you are facing high-interest rates. In order to determine whether you qualify for bankruptcy, consult with a bankruptcy lawyer.
If you have any questions, you can get a free consultation with the Best Attorneys in Utah.
Ascent Law LLC:
8833 South Redwood RoadSuite C
West Jordan, UT 84088
(801) 676-5506
