Filing for Bankruptcy?
No one ever plans to file for bankruptcy, but if you ever find
yourself in a financial bind, filing for bankruptcy to remove most
of your debts may be the only alternative you have to start over
again and reclaim your life. By filing for bankruptcy, you can
protect yourself from creditors that may try to repossess your
property and who often make harassing calls to your home.
In the United States, individuals that need to declare
bankruptcy can file for either chapter 7 or chapter 13 bankruptcy
protection. Chapter 7 bankruptcy protection is the typical
bankruptcy that everyone thinks of when they hear the word. In
chapter 7 bankruptcy, the courts will try to liquidate your assets
in order to pay off your creditors. Once all your assets have been
sold off, the rest of your debts will be discharged by the
bankruptcy court. Chapter 13 bankruptcy is slightly different.
Chapter 13 bankruptcy is often called a working man's bankruptcy
and is intended for people that have jobs. In chapter 13
bankruptcy, your bills become reorganized and consolidated. You
will then have to work out a payment plan for the courts. Once the
court has approved your plan, you have a certain amount of time to
pay off your debt according to the plan. Should you fail to adhere
to the plan, your bankruptcy protection will be nullified, opening
you up once again to creditors.
In order to qualify for chapter 7 bankruptcy protection, you
need to pass what the government calls a means test. In order to
pass the means test and meet the qualifications for chapter 7
bankruptcy, you need to earn less than the median income of the
state in which you reside. If you earn more than $167 over the
median income of the state you do not qualify for chapter 7
bankruptcy. Many people want to qualify for chapter 7 because it
discharges most of their debts instead of making them repay it
later as in chapter 13.
Chapter 7 and chapter 13 bankruptcies can eliminate most debts,
but some debts can almost never be discharged by bankruptcy courts.
This includes student loan debts, lawsuit awards, spouse and child
support, and most taxes. Also before filing for bankruptcy it is
important to know how a filing can affect the rest of your life.
For one thing, chapter 7 stays on your credit report for up to 10
years. Chapter 13 bankruptcy will remain on your credit report for
7 years. Having a bankruptcy on your credit report will make it
difficult to obtain loans, get credit cards, find housing, or even
gaining employment.
Ross
Steve
Maxine
