Chapter 7 Bankruptcy
Chapter 7 Bankruptcy is commonly referred to as the “fresh start bankruptcy.” Chapter 7 Bankruptcy allows you to discharge or get rid of all of your unsecured debts and keep most, if not all of your possessions including your car and your home. Unsecured debts are credit cards, store charge cards, gas credit cards, payday loans, personal loans, debts from repossessed property, utility bills, cell phone bills, and medical bills. In some cases, you will also be able to discharge old income tax debts and property tax debts. You do have to qualify to file Chapter 7 Bankruptcy, but if you do and most people who need to file Chapter 7 Bankruptcy do, it is clearly the fastest, most affordable way to get yourself out of debt and give yourself a fresh financial start. Your bankruptcy attorney can give you more specific information regarding your particular situation in your first bankruptcy consultation.
Chapter 13 Bankruptcy
Chapter 13 Bankruptcy is commonly referred to as a Debt Adjustment Bankruptcy provision within the U.S. Bankruptcy Code. In most cases, people file for Chapter 13 bankruptcy when they need to save a home from foreclosure, save a car from repossession or don’t qualify for a Chapter 7 bankruptcy because their incomes are too high, or wish to keep valuable assets that they would otherwise lose in a Chapter 7 bankruptcy. In a Chapter 13 bankruptcy, the debtor must enter into a payment plan for a three to five year period so that the delinquent payments and other unsecured debts can be paid off in a manner that is affordable to the debtor.
How do you qualify to file bankruptcy?
Chapter 7 bankruptcy filers do need to qualify in order to file. To qualify for a Chapter 7 bankruptcy filing, you must not have filed within the past eight years and your household income must be below the median income for the state in which you reside. Generally speaking, your household income for the last six months is averaged and then multiplied by 12 to arrive at your qualifying income. Your qualifying income is then compared to the median income of your State for a similar-sized family. If your qualifying income is below the median income you qualify to file a Chapter 7 Bankruptcy. If your qualifying income is slightly above the median income you still may qualify, but that formula is too complicated to go into here. Your bankruptcy attorney will be able to determine your eligibility for filing Chapter 7 using all the possible eligibility methods. If you don’t qualify to file under Chapter 7, you may still file under Chapter 13.
Does a Bankruptcy Filing Ruin Your Credit Forever?
No, your credit will not be ruined as a result of a bankruptcy filing. In most cases, your credit rating is already very low. A bankruptcy filing is the most effective and affordable way to rebuild your credit score and your creditworthiness. One component of your credit score is your debt to income ratio. Right now, your debt to income ratio is probably quite high resulting in a low credit score. Once you eliminate your debt in the bankruptcy, your debt to income ratio drops dramatically and ironically, your credit score will increase as a result!
A bankruptcy filing will generally remain on your credit report for 7 to 10 years. While this information is on your credit report, it doesn’t mean that you won’t be able to get credit in the future. In many cases, you will be offered credit cards and be eligible for other types of non-real estate credit within 6 to 12 months post-bankruptcy. It generally takes about 2 years post-bankruptcy to become eligible for mortgage debt. Be very careful about getting back into the credit card game after your bankruptcy for obvious reasons. You cannot file for bankruptcy again for another eight years.
Does filing for bankruptcy cost much?
Filling for bankruptcy is the fastest and most affordable way to get yourself out of debt. Your bankruptcy attorney should offer a payment plans to make paying for your bankruptcy filling as affordable and as convenient as possible.
Bankruptcy in the United States is a matter placed under Federal jurisdiction by the United States Constitution which allows Congress to enact "uniform laws on the subject of bankruptcies throughout the United States." The Congress has enacted statute law governing bankruptcy, primarily in the form of the Bankruptcy Code, located at Title 11 of the United States Code. Federal law is amplified by state law in some places where Federal law fails to speak or expressly defers to state law.
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About The Author:
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This article was written by J. Mark Soveign who writes for Wertheim Communications LLC as well as Mooker.Com Did you like this story? If so, vote for it on your favorite social bookmark site: |
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