When Should I File for Bankruptcy?

While the idea of filing for bankruptcy can often have a negative stigma, many people struggle through difficult financial periods in their life. This can often be a stressful time, as some individuals may face losing their home or not being able to support their family. Filing for bankruptcy can be very beneficial for individuals, allowing them a fresh start to their financial situation. It can help individuals during these times of financial crisis. If you find yourself in this position, it could be time to speak with an experienced attorney about filing for bankruptcy.

Types of Bankruptcy

There are three types of bankruptcies that an individual may file for. This includes the following

  • Chapter 7: When an individual files for this bankruptcy, their assets may not be seized and they are able to keep them. This type of bankruptcy discharges most of an individual’s debt. This means they may not be required to pay credit card debt, personal debt, medical bills, automobile repossessions, and foreclosures.
  • Chapter 13: In order for an individual to keep their assets under this bankruptcy, they must be under the protection of the Bankruptcy Court. This requires them to submit a plan to repay their debts over the course of 3-5 years. Once this plan is completed, outstanding debts may be discharged.
  • Chapter 11: A business may file for this bankruptcy in order to stay open and running. This allows them to continue generating income and keep employees on staff. It requires the business to create a 5-year payment plan that allows them to restructure their finances and pay debts over time.

Am I Eligible?

It is important to know that there are options to file for bankruptcy in order to relieve yourself of this stress. Individuals can file for Chapter 7 or Chapter 13 bankruptcy. It is also possible to file for business bankruptcy, also known as Chapter 11 bankruptcy.

When filing for Chapter 7 bankruptcy, there are requirements that need to be taken care of before filing. Applicants are required to go through credit counseling through a United States approved agency within 6 months before filing. They must also take a debtor education course. In order to be eligible, applicants must pass a means test that compares the individual’s income with the median income of the country. If they are above the median income, they may not be able to file for bankruptcy. If they are below median income, they may be eligible.

In order to file for Chapter 13 bankruptcy, an individual must receive credit counseling within 180 days before filing. If they have a previously dismissed petition within 180 days, they are unable to file again. An individual must have a regular and disposable income at the end of each month in order to be eligible for Chapter 13 bankruptcy. In addition to this, their unsecured debts cannot exceed $360,000 and secured debts cannot exceed $1,310,000.

Contact our Firm

If you or a family member is considering filing for bankruptcy and need the help of a skilled attorney, contact the Law Offices of Allen A. Kobler, Esq. today.

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.