Nobody likes paying bills, but if your financial situation has made it feel impossible for you to do so, then you may consider filing for bankruptcy. Most people know that bankruptcy can eliminate many of your debts, wiping the slate clean and providing a fresh start, but few know that the process has strict requirements that must be met. The two types of personal bankruptcy are Chapter 7 and Chapter 13. Where Chapter 7 discharges most debts while liquidating many of the debtor’s personal assets, Chapter 13 reorganizes debts to make them more manageable. Though you may prefer Chapter 7, not everybody meets the requirements, and end up having to choose Chapter 13.

The best way to determine which type of bankruptcy is best for you is to consult with an experienced bankruptcy attorney, but below you will find preliminary information on the criteria for each.

Chapter 7 Bankruptcy:

• Six months of monthly income that averages less than the median income for the same-sized household in your state
• Cannot have filed for Chapter 7 bankruptcy in the previous eight years or for Chapter 13 in the previous six years
• Must complete an approved credit counseling course within 180 days before filing

If you have previously applied and been rejected, you are required to wait a minimum of 181 days before refiling. Any attempt to defraud creditors will make you ineligible.

Chapter 13 Bankruptcy:

• Must have enough income to make the payments detailed in your bankruptcy plan
• Unsecured debts cannot be more than $419,275 and secured debts cannot be more than $1,257,850
• Must provide proof of having filed both federal and state income taxes in each of the last four years
• Must complete an approved credit counseling course within 180 days before filing

If you have previously applied and been rejected, you are required to wait a minimum of 181 days before refiling.

Though you may believe that you qualify for a Chapter 7 bankruptcy, there is a means test that you will need to pass in order to be able to proceed with your filing. If the supporting documentation that you provide does not meet the criteria, you will be able to proceed with a Chapter 13 bankruptcy filing. For more information, contact our team today!