Bankruptcy is defined as a legal proceeding typically carried out to allow insolvents to receive freedom from due financial obligations. In addition, it allows creditors an opportunity to collect payments. Normally, filed cases of bankruptcy are handled in federal courts. The U.S. Bankruptcy Code has divided bankruptcy into different types. The types are identified by their chapters. The types of bankruptcy filings include chapter 7, chapter 11, chapter 13, and other bankruptcies.
When an individual and a business go insolvent it gives them a fresh start. But they must remember that it will remain on their financial records, and will surely influence their credit scorecard. However, if you are wondering things like, “who can file for bankruptcy relief?” or, “do I qualify for bankruptcy?” read this article. We’ll discuss basic information that can help you with your bankruptcy case.
Historically, if you have filed a chapter 7 bankruptcy and you have also received a discharge, you will need to wait eight years before filing another case. If you filed a chapter 7 bankruptcy, but didn’t finish it, you can conveniently file it again. The only condition applied here is that the court didn’t bar your case from being refiled. Otherwise, you will qualify.
The legal setting is somewhat different when it comes to chapter 13. In the past, if you filed and discharged a chapter 13 case, but now want to file again, it is impossible for you to file before six years. If you did not receive a discharge the last time you filed a case, you are now allowed to file a chapter 7 case.
You must pass a means test to see whether you qualify for bankruptcy or not. As per the BAPCA (Bankruptcy Abuse and Consumer Protection Act) of 2005, debtors are required to pass a means test if they desire to qualify for chapter 7 bankruptcy. If they fail this test, they are unable to file for bankruptcy.
To pass the means test, a debtor needs to have little or no disposable income. The means test attempts to average a debtor’s average monthly income for a 6-month period. This amount is then compared to similar households in your state. You will qualify to file for bankruptcy in the event your income is lower than the median value.
When your income is more than the median, you still need to complete the means test form. You may not opt to qualify simply on your level of income. The Means test can be a balancing act. It tries to ensure that your expenses are balanced against your income. But you are allowed to use your actual expenses for certain items only.
If you are planning to file a chapter 7 bankruptcy, taking a pre-bankruptcy credit counseling course is another condition for you to successfully qualify. The course must be completed by an approved agency. Not only this, you are also required to finish this course within a time limit of 6 months (preceding the date you file your case). Once you finish this counseling course, you will receive a certificate. Present this certificate to the court when filing a chapter 7 bankruptcy.
If you are interested in even more business-related articles and information from us here at Bit Rebels, then we have a lot to choose from.
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