What are the prerequisites for Chapter 7 bankruptcy?

Before applying for bankruptcy, individuals should make sure they are considering all options that are available to help fix their financial situation. At this time, they will need to ensure that they meet the requirements that are needed before filing for bankruptcy. Chapter 7 bankruptcy has certain requirements that people must complete before they are able to file for it. Individuals have to go through credit counseling and attend a debtor education course to prepare for this process. In addition to these requirements, they must pass a means test. This test is used to compare their income to the median income in the United States. In order to be eligible to claim their individual bankruptcy, their income has to be below the median income. However, there has been cases where they can be approved even if their income does not fulfill that standard.

Once you have met the eligibility requirements, a petition for bankruptcy must be filled out. In this petition, you will have to claim a list of all your debts, an account of your income, monthly living expenses and a list of assets. Once the paperwork is completed, the automatic stay goes into effect immediately to bar creditors from contacting debtors during this process. Creditors are no longer able to harass debtors for the money that is owed to them once the automatic stay goes into effect. This can be beneficial for debtors since they will not have to face the added stress of creditors contacting them. With this in mind, the automatic stay may even be able to prevent foreclosure. There are certain circumstances that can help these individuals.

Are Chapter 7 and Chapter 13 bankruptcy similar?

There are two different processes that individuals may be able to use for bankruptcy. They can either file for Chapter 7 or Chapter 13 bankruptcy. With these forms of bankruptcy, individuals are able to get the help they need to focus on and improve their finances. They may be able to prepare themselves for a better financial future that can help them avoid further pitfalls. These bankruptcy proceedings are better fitted for individuals who are eligible to claim bankruptcy, rather than a business that wants to claim bankruptcy. Before individuals go through either bankruptcy process, individuals must complete the requirements for the claim.

If you require the services of an experienced Business Law or Bankruptcy attorney, contact the Law Offices of Allen A. Kolber, Esq. today to schedule a consultation and discuss your options.