Bankruptcy is a powerful debt relief tool. While the idea may seem scary, there isn't much to be afraid of in filing. The key is in having a basic understanding of the process so you know what to expect. Throughout the course of your case there are specific guidelines you must follow, the first hurdle to overcome is qualifying for bankruptcy.
While many people assume that bankruptcy is open to everyone, this can be a misleading statement. There are some exclusions for who can file, which debts are eligible and which type of bankruptcy you may file.
Determining Eligibility
The biggest qualification factor comes in filing for Chapter 7. The laws regarding a Chapter 7 case are more restrictive, meaning that not everyone will be eligible to file under this bankruptcy chapter. In order to qualify for Chapter 7 you must pass a means test, which evaluates your income, assets and debts against the standard for your state. Passing the means test for eligibility for Chapter 7 requires that your financial situation score equal to or less than the median income level of your state of residence. If your score exceeds the median income level of your state you may not be eligible for Chapter 7, but may be able to file for Chapter 13.
In general, eligibility for Chapter 13 is pretty easy. Most debtors who apply for Chapter 13 will be qualified and able to pursue debt relief through this path. The main determining factor that could disqualify you from a Chapter 13 case is your total debt level. If your unsecured debts exceed $336,900 or secured debts exceed $1,010,650, you may not be eligible for Chapter 13.
Further, either Chapter 7 or Chapter 13 bankruptcies could be denied if you have filed within the last few years or have been involved in a prior case of bankruptcy fraud. The rule for filing Chapter 7 is that you must wait at least 8 years from a prior Chapter 7 case or 6 years from a prior Chapter 13 discharge. For filing Chapter 13, you must wait at least 4 years from a prior Chapter 7 discharge or 2 years from a prior Chapter 13.
Qualifying Debts
Contrary to popular belief, not all debts are eligible for bankruptcy protection. In many cases, tax debts are not eligible for a discharge in bankruptcy. In order to have tax debt discharged, they must be income tax debts that are at least three years old and have a return on file with the IRS. Student loan debts are also rarely eligible for bankruptcy protection, but have been allowed in Chapter 13 in extreme cases. Back due child support, alimony and criminal restitution payments are also typically ineligible for bankruptcy.
The P.R. Smith Law Group aims to help local residents resolve their debt issues and achieve a financially healthy future. They provide high quality legal representation that helps lower monthly debt payments, stop wage garnishment,prevent foreclosures and repossessions, and stop calls from creditors. P.R. Smith bankruptcy lawyers in Tampa have many years of experience in all aspects of Chapter 7 and Chapter 13.
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