How to Know Whether You Qualify For Bankruptcy

This past year was a tough time economically for many people, and 2010 does not appear to be any different. Many people have bills piling up and no means to pay. Unemployment rates and foreclosures are at an all-time high. Businesses are closing, and people are in desperate economical shape. However, how does one determine if it is time to file bankruptcy or not? How do you know when enough is enough? There are various factors determining if bankruptcy is suitable for a person or not. Here is an outline of what aspects needed to qualify.

Chapter 7 Requirements

If you are someone who was recently unemployed and has no other means of income, then you may qualify for Chapter 7 Bankruptcy. The way it is determined is via a Means Test. It is a tool administered by the courts to see how your income compares to other families of same size and location. For instance, if your income is lower than the average median income in your area and no other means to pay your bills and creditors then the courts may approve you under Chapter 7 rules.

Once accepted, the courts will assign a trusted appointee who compiles a list of all of your non-exempt assets. These non-exempt assets are sold to pay off creditors. The rest of your debt is dismissed by the courts. As a result, many people are much more relieved after the process is complete. For it leaves a clean slate to start fresh without the constant worry of past financial mistakes looming overhead.

Chapter 13 Requirements

If your application is rejected due to exceeding the income requirements for a Chapter 7 filing, then Chapter 13 is suitable for you. Additionally, if you have debt legally unreleased by the courts and personal and/or business assets then Chapter 13 would be the best plan to follow. For in Chapter 13, courts will establish a repayment schedule to pay off your debts in an average of 3-5 years. Therefore, Chapter 13 is for someone who has a steady means of income, and assets available.

Chapter 13 will stop your home from going into foreclosure. For once Chapter 13 Bankruptcy is filed the foreclosure process stops. However, it is temporary. You must bring the past-due payments current over a reasonable time. If not, you shall lose your house. Thus, do not think you are completely off the hook. Keep making your regular mortgage payments as explained by the courts and/or attorney. Repaying your missed mortgage payments is part of the process.

Filing for bankruptcy is not a simple process. The emotional ties people have towards monetary belongings are taxing. These emotions easily arise during these times, and the best way to handle the procedure is with support. You need to inform your family and friends what is unfolding. Find yourself a reputable attorney with experience in Bankruptcy law. Do research online to gather as much information about it before proceeding forth.

By Tony Mandarich and Reda Abouleish

Check out an Arizona Bankruptcy Attorney or a Scottsdale Bankruptcy attorney today.

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