Learn More About Chapter 7 and Chapter 13 Bankruptcies
The Two Types of Personal Bankruptcy
If you’re considering filing for bankruptcy as a way of escaping debt, it’s important that you know as much as you can about bankruptcy before you move forward. Read on to get an idea of which type of personal bankruptcy, Chapter 7 or Chapter 13, would best suit your financial needs.
Chapter 7 Bankruptcy, or “liquidation,” allows petitioners to discharge most unsecured debts.
Chapter 13 Bankruptcy, or “reorganization,” allows petitioners to repay most secured debts over the course of three to five years.
Chapter 7 & Chapter 13: The Similarities
Whether you file under Chapter 7 or Chapter 13 of the Bankruptcy Code, you’ll have to fulfill certain requirements. Before actually filing your petition with the court, you’ll have to complete an approved Credit Counseling briefing. The purpose of the briefing is basically to introduce bankruptcy alternatives (like credit counseling, debt consolidation, etc.) and make sure that bankruptcy is your only viable option. Read more
Qualifying to File Chapter 7 Bankruptcy
Of all the bankruptcy options, Chapter 7 may be the most dramatic. Typical cases take only a few months, and are designed to completely eliminate all of a filer’s debts related to credit cards, medical bills, utility bills and personal loans.
Because Chapter 7 bankruptcy can be so effective and sweeping when clearing out unsecured debts, Congress established a set of requirements that must be met before a person is able to file.
The Bankruptcy Means Test
The bankruptcy means test, as it is known, was part of the new bankruptcy laws of 2005. In order to file Chapter 7, you’ll need to pass the means test.
The good news is, the means test is not an actual exam. It is a measurement of “true need,” and a bankruptcy lawyer can take you through the test and, in short order, let you know if you qualify.
Basically, it works by taking into account your income, your debt and the size of your family, to determine if you truly do need Chapter 7 bankruptcy.
This may sound intimidating, but it’s not designed to be the roadblock it may seem. The means test is in place to prevent people from taking advantage of the system. That’s a testament to the power of Chapter 7 bankruptcy. Read more
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The information contained on this website is intended to be informational only, it is not legal advice. Bankruptcy issues, and questions having to do with filing for bankruptcy, tend to be very individual and can be complex. You should consult with a bankruptcy attorney licensed to practice in your state for advice about your particular situation before making any decisions.
The free, no-obligation evaluation, that is found on FilingBankruptcy.org, can be used to gain access to an attorney in your area. It is important to speak with a local attorney about your specific financial situation, before making any decisions.