For most people, the process of filing for bankruptcy may be frightening, and that is because they choose to go through the process alone. There are many reasons why people choose to do this, ranging from guilt to embarrassment to fear of stressing finances further by contacting bankruptcy lawyers in Memphis, TN. In reality, however, those who seek help will receive sound financial advice as well as a more favorable outcome if they choose to contact a bankruptcy lawyer. The most basic of questions to ask before filing is who is a good candidate for undergoing the bankruptcy process? The following can help answer that question. |
Who Can Qualify for Chapter 7 Bankruptcy?
Chapter 7 bankruptcy is the most commonly filed form of bankruptcy, as it provides total debt relief for most Americans. Knowing this, what are the qualifications for Chapter 7 bankruptcy? Here are some of the criteria that must be met:
• A passed means test: In order for a judge to determine someone’s eligibility for Chapter 7 bankruptcy, there needs to be a determination on if the individual in question is able to repay their debts. The largest factor in this decision is the means test, which determines if they have any disposable income with which to pay any debts. If their income is below the median of others in the state, they will most likely pass the means test and qualify for Chapter 7 bankruptcy.
• No history of filing for bankruptcy: While it is possible to file for bankruptcy more than once, it cannot be filed again if there is filed and discharged debt within the last 8 years under Chapter 7 or the last 6 years under Chapter 13.
• Meet credit counseling requirements: As part of a bankruptcy agreement, there is an expectation to participate in credit counseling at least 180 days before filing for bankruptcy. This counseling will be performed with a nonprofit agency approved by the U.S. Trustee's Office. If this requirement isn’t met, debt relief will become ineligible.
• No defrauding of creditors: All finances will be under close examination during the filing process. If there is proof of any defrauding against creditors by transferring property to friends or family members, purchased luxury items, destroyed property, or lying on an income or credit application, bankruptcy will no longer become a possible option.
What Are the Qualifications for Chapter 13 Bankruptcy?
Chapter 13 bankruptcy is different from Chapter 7 in that a debt is not forgiven but is restructured into more manageable payments. Relief from creditor harassment is granted, which makes it easier to pay down a debt. For many Americans, this filing is preferable to Chapter 7 because one’s home and other assets can still be kept. Here are some qualifications that must be met in order to file for Chapter 13 bankruptcy:
• There is enough income to reasonably pay down debt: While complete debt payoff may not be possible under current rates and payment plans, if there is enough income to reasonably pay down debts if the payments are restructured, then the court may allow for Chapter 13 bankruptcy.
• No business entity included: Eligibility for Chapter 13 bankruptcy is only available to an individual or jointly filing husband and wife. If a business entity is involved, Chapter 11 bankruptcy is a more probable option.
• No previous filings for bankruptcy: If Chapter 13 bankruptcy has been filed for in the past 2 years or Chapter 7 bankruptcy in the past 4 years, Chapter 13 is no longer a possible option. • Income tax returns have been filed: It’s required that the past 4 years of income taxes be filed in order to be eligible for Chapter 13 bankruptcy.
Now that you know more about bankruptcy and what chapter you might qualify for, reach out to a bankruptcy lawyer for help with getting started.
Hurst Law Firm, P.A. The attorneys at the Hurst Law Firm are dedicated to helping clients in need of bankruptcy protection in Memphis, Tennessee Visit our page on http://www.hurstlawfirm.com to see our page today!
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