Personal Bankruptcy Requirements
Anyone considering a bankruptcy filing as part of a financial overhaul or debt elimination strategy is wise to learn as much as possible about bankruptcy, including the requirements for filing personal bankruptcy.
Bankruptcy laws outline specific requirements based on the type of bankruptcy the filer is seeking. However, for those struggling financially, many of these requirements are fairly easy to meet and bankruptcy remains an option for debt relief.
If you'd like to speak directly with a bankruptcy lawyer to learn about bankruptcy filing requirements in your state, simply fill out this form for a free consultation.
Chapter 7 Bankruptcy Requirements
Chapter 7 bankruptcy, also known as "liquidation," grants filers a complete discharge of their eligible unsecured debts. In other words, those who file under Chapter 7 of the U.S. Bankruptcy Code may have certain debts completely forgiven.
In order to qualify for Chapter 7 bankruptcy, a filer must:
- Pass the means test: This test, introduced by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, requires filers to compare their income with the median income of a family their size in their state. It may also include other financial calculations, depending on an individual filer's circumstances. Because of the complicated math and laws involved in the means test, most bankruptcy insiders recommend working with an attorney.
- Have no Chapter 7 discharges in the last eight years: Bankruptcy laws prevent filers from getting a Chapter 7 discharge more than once every eight years.
- Complete a Credit Counseling Course: This course, also introduced in the 2005 law, is designed to educate potential filers about their debt relief options and is required of all consumer bankruptcy filers.
Chapter 13 Bankruptcy Requirements
Chapter 13 bankruptcy, also known as "reorganization," offers filers a period of three to five years in which they can catch up on overdue debts by reorganizing their finances into a repayment plan. In order to qualify for Chapter 13 bankruptcy, a filer must:
- Have a steady source of income: Missing even a single payment in the three- to five-year repayment plan that's part of Chapter 13 bankruptcy process can cause the bankruptcy court to dismiss a filer's case. For this reason, it's essential that Chapter 13 filers have a predictable source of income that they know will allow them to continue making payments for the duration of their case.
- Have no Chapter 7 discharge in the last six years: Those who have filed for Chapter 7 bankruptcy in the past must wait a number of years before being eligible for Chapter 13 protection.
- Complete a Credit Counseling Course: This course is designed to educate potential filers about their debt relief options. A certificate of completion must be included with the Chapter 13 petition.
Again, a local bankruptcy lawyer is an excellent resource for learning more about personal bankruptcy requirements. For more information about filing for bankruptcy, connect with a local attorney today for a free case evaluation.