There are a number of different types of bankruptcy including Chapter 7 and Chapter 13 and they both provide a way to get rid of unsecured debt. However, you should be aware of the fact that you need to follow certain rules when filing for simple bankruptcy.
Chapter 7 bankruptcy
Chapter 7 bankruptcy is a great way to get out of debt. However, it isn’t a quick process. It can take up to 3.5 months to get all of your debts wiped out.
When it comes to filing for Chapter 7 bankruptcy, you’ll want to do your research. You don’t want to make a mistake that costs you more money than you can afford.
A good first step is to figure out what your income is. You can do this by subtracting your expenses from your income. If you don’t have enough to pay for your bills, you might be able to file for Chapter 13 instead.
Once you have your numbers, you’ll need to fill out the proper bankruptcy forms. These will contain information about your finances, your debts, and the assets you own.
You’ll also need to submit recent tax returns and pay stubs. The Department of Justice publishes updates on the law regularly. You’ll need to have credit counseling within six months of filing. If there is no approved counseling agency in your area, you may forgo this option.
One of the best ways to find out if you qualify for bankruptcy is to use the “means test.” You’ll need to make sure that your income is below the median. If your income is above the median, you’ll need to calculate your expenses. If you don’t pass the means test, you won’t be eligible to file for bankruptcy.
Chapter 13 bankruptcy
If you’ve been facing financial hardship, you may want to consider filing for Chapter 13 bankruptcy. This type of bankruptcy is designed to help you get out of debt, save your home from foreclosure, and restructure your bills over time.
If you decide to file for Chapter 13, you’ll need to meet with a lawyer. This person will be able to guide you through the process and ensure you avoid making mistakes that could lead to your case being thrown out.
The court will also require that you submit a proposal for a repayment plan. This is a detailed document that lays out your financial situation, your debts, and how you plan to pay them over a period of three to five years. The proposal must be approved by creditors and the bankruptcy court.
Generally, Chapter 13 debts will be broken down into three categories. These are: secured debts, unsecured debts, and priority debts. During your plan, you must make payments on priority debts. This includes past-due tax obligations and child and spousal support payments.
Depending on your household income, you will be required to file a means test to determine how much disposable income you have to pay your creditors. Your credit counselor can help you determine how much income you have and how you can repay your creditors.
Chapter 12 bankruptcy
A chapter 12 bankruptcy is a special type of debt restructuring bankruptcy. It enables financially distressed family members to propose a plan of reorganization to pay their debts over time.
In order to qualify for a chapter 12 bankruptcy, the debtor must meet certain eligibility requirements. Most importantly, the debtor must have sufficient disposable income to cover the payments. The debtor’s plan must also pass the “best interests of creditors” test. If the plan does not, the court will likely not approve it.
The debtor must also attend a meeting of creditors. At this meeting, the creditor must be given notice that a Chapter 12 petition has been filed. At this meeting, the debtor will be sworn in. The debtor will also be asked to certify that he or she has paid all domestic support obligations.
Once the court has approved the plan, the debtor will be discharged from most of his or her debts. However, certain categories of debts are not discharged. This includes child support, alimony, and debts for willful and malicious injury to a person.
In addition to the payment of debts, the debtor must also live on a fixed income for three to five years during the case. If the debtor cannot maintain this level of payment, the case will be dismissed.
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