If you are struggling to pay your bills and get out of debt, you may be considering filing for bankruptcy. Bankruptcy may be able to help you reduce or eliminate your debt and get back on your feet financially. Before you file for bankruptcy, it is wise to understand the requirements to file for bankruptcy. The requirements are based on the type of bankruptcy you are pursuing. All applicants will need to complete credit counseling and meet income guidelines before they can move forward.
Do Most People Qualify For Chapter 7 Bankruptcy?
Qualifying for Chapter 7 bankruptcy is often more challenging than qualifying for Chapter 13 bankruptcy. Chapter 7 bankruptcy is also called liquidation or straight bankruptcy. This type of bankruptcy can wipe out many types of unsecured debt. There are several requirements for filing for Chapter 7 bankruptcy, including the following:
- The average of your monthly income must be lower than the median income for the same-sized household in California. If you do not meet this requirement, you will need to pass the means test. The means test determines whether your disposable income is high enough to make partial payments to unsecured creditors. If you fail the means test, you may still qualify for chapter 13 bankruptcy.
- You have not filed for a Chapter 7 bankruptcy in the previous eight years
- You must finish an approved credit counseling course
Do I Qualify For Chapter 13 Bankruptcy?
The requirements to file for Chapter 13 bankruptcy are different from those of Chapter 7 bankruptcy. To file for Chapter 13 bankruptcy, you will need to meet the following requirements:
- You have enough income to make the monthly debt payments outlined in your bankruptcy plan
- Your unsecured debts, such as medical bills and credit card debt, must be less than $419,275.
- Your secured debts, such as your car payments and mortgage, must be less than $1,257,850.These dollar amounts will be in effect until April 2022. The debt limits change every three years.
- You need to provide proof that you filed federal and state income tax returns for the last four years
- You will need to complete an approved individual or group counseling course
If you do not qualify for a Chapter 7 bankruptcy, you may be eligible for a Chapter 13 bankruptcy. In some cases, lenders view a Chapter 13 bankruptcy more favorably than a Chapter 7 bankruptcy. They may consider a Chapter 13 bankruptcy filer less of credit risk because, in a Chapter 13 bankruptcy, you will repay all or part of your debts within a three to five year timeframe. In a Chapter 7 bankruptcy case, all of your debts will be erased.
Contact a San Diego Bankruptcy Attorney
Are you wondering whether you qualify for bankruptcy? The attorneys at Bankruptcy Law Center can review your case and advise whether you are eligible for a Chapter 7 and/or Chapter 13 bankruptcy. Contact the skilled bankruptcy attorneys Bankruptcy Law Center today to schedule your initial consultation.