Personal bankruptcy rules have been established by the federal government to ensure that only those who are in true need of debt relief get the assistance they need. If you are having problems managing your finances and you need are having problems paying off your debts, you may be eligible for some type of bankruptcy.
The two different chapters of personal bankruptcy are Chapter 7 and Chapter 13. Typically, Chapter 7 is filed by those who have a limited source of income and not too many assets. Chapter 13 is geared towards those who have a steadier source of income and more assets.
An experienced bankruptcy attorney can work with you to help you determine if you are eligible to file, and what type of bankruptcy you should file.
Personal Bankruptcy Rules for Chapter 7
When you file for Chapter 7, you may have the chance to eliminate most if not all of your unsecured debts. The debts in this category include:
- Medical debt
- Payday loans
- Credit card bills
- Utility bills
- Some types of personal loans
However, in order to qualify for Chapter 7, there are personal bankruptcy factors that you must meet. In fact, debtors who want to file for Chapter 7 will need to take and pass a means test. Individuals should not be intimidated by this test. It is simply a process that the bankruptcy courts use to calculate your income and expenses. This calculation will determine if you qualify for Chapter 7.
Rules for Chapter 13
Fortunately, if you do not qualify for Chapter 7, you can choose to file for Chapter 13. With this type of bankruptcy, instead of qualifying with a means test, you will set up a debt repayment schedule. These monthly payments will be made to a court appointed bankruptcy trustee.
Also, the trustee will handle all communications and payments to your creditors. In order to qualify for this type of bankruptcy, you will need to have a reliable source of income. You will also need to make sure that your unsecured and secured debts do not exceed a certain amount.
One of the most powerful advantages to filing Chapter 13 is that you may be able to put a stop on a home foreclosure.
So, if you are considering bankruptcy, consult with a bankruptcy attorney to learn if you meet personal bankruptcy rules., it is best to consult with a bankruptcy attorney. The attorney will give you advice and recommendations so you can make an informed decision on how to proceed.