You may be surprised to find yourself considering bankruptcy—as well as finding yourself with overpowering debt. Usually this type of situation presents itself after an event you may have had little control over. An injury may have left you not only in considerable pain, but also unable to work, causing a major disruption in your income—or you may have even lost your job altogether. You may have become ill, or a family member may be sick, not only causing stress and worry, but resulting in far more medical bills than can be paid. During such challenging times, you may also have had to rely on credit cards more than usual, with high balances accruing, and no way in sight to pay them.
Explore Your Options with an Experienced Attorney First
You probably have many questions about your options, as well as bankruptcy, all of which can be answered at a law firm like Fitzgerald & Campbell, APLC. This is where your education in debt resolution begins—and in most cases, this is a very positive experience! Your bankruptcy attorney will review your case and assist you in determining what your choices are, as well as helping you to understand how the processes work. It may be determined that a solution such as debt settlement simply won’t suffice in resolving all your debts, pointing you toward filing for either Chapter 7 or Chapter 13.
Eligibility for Chapter 7 Bankruptcy
The Chapter 7 bankruptcy is usually reserved for debtors with lower income and few assets. While assets such as the home or car can often be protected, any non-exempt assets may be sold by the bankruptcy trustee, with the proceeds divided up among creditors. The discharge is given in a much shorter time (usually three to six months) in comparison to Chapter 13, and because of this many debtors hope to become eligible for Chapter 7. To do so, you must pass the means test. While the system itself can be rather complicated to understand, the basics of ‘passing’ the test are simple: you must make less than the median household income in your state. You must also complete a credit counseling course, attend the meeting of creditors, and file your petition. Once the court determines that you are eligible, the trustee will manage your case, including selling any non-exempt assets to pay creditors.
Eligibility for Chapter 13 Bankruptcy
You may decide to file for Chapter 13 simply because you are not eligible for Chapter 7. Upon consulting with your bankruptcy attorney, however, you may instead be filing for Chapter 13 simply because it is of greater benefit to you, allowing you to keep your home and/or car and other assets, despite delinquent payments. Because your repayment plan in Chapter 13 will center around paying off debts with disposable income, the court will need to discern whether you make enough to complete the plan. Eligibility is denied for those who have secured debts higher than $1,184,200, as well as unsecured debts higher than $394,725.
Contact Us Now
Whether you are thinking about filing for bankruptcy, or exploring other options for debt reorganization, contact us at Fitzgerald & Campbell, APLC. Our attorneys have decades of experience in serving clients with similar financial situations. Let us review your case and discuss what would work best for you. We are here to help!