Are you eligible to declare bankruptcy?
If you feel like you are drowning in debt and cannot seem to find any way to put an end to your financial problems, there is a very good chance that you qualify to file for bankruptcy. The right to declare bankruptcy is provided under Title 11 of the United States Code, and it exists in order to give people a second chance and the opportunity to make a fresh start financially. Everyone makes mistakes, and in many cases, debt is the result of circumstances that are beyond a person's control. While it is very likely that you do qualify for bankruptcy, the major question is, which type of bankruptcy do you qualify for as an individual or business?
Chapter 7 Bankruptcy Eligibility
For most people, the most attractive option when considering bankruptcy is to file under Chapter 7 of the Bankruptcy Code. Chapter 7 has the advantage of being much faster than Chapter 13, since it can usually be completed in a period of a few months as opposed to spending up to 5 years repaying one's creditors. In order to prevent unscrupulous individuals from abusing the system, however, Congress passed legislation several years ago that requires certain debtors to pass a means test before they can proceed with a Chapter 7 case. If your current monthly income is above the average level for the state, you will be required to take this test.
The means test essentially consists of a comparison of your income with your debt load, and the purpose is to determine if you are actually so deeply in debt that you cannot afford to pay back your creditors at all, even with a reduced payment plan. Many people mistakenly fail the means test because they do not know about the many exemptions that can be claimed in order to reduce the amount that you have to report as your income. By working with a Modesto bankruptcy lawyer, you can greatly improve your chances of being approved to proceed with your Chapter 7 petition.
Qualification for Chapter 13 Bankruptcy in Modesto
Even if you do not qualify for Chapter 7, you should be eligible for Chapter 13. This type of bankruptcy is available to people whose unsecured debts are less than $360,475 and whose secured debts are less than $1,081,400. Beyond meeting the basic eligibility requirements, your bankruptcy attorney may additionally have to overcome objections filed by individual creditors who would seek to have their loans protected from the bankruptcy. To find out what type of bankruptcy you will qualify for and to get started on your petition, contact us at Scott Mitchell Law Incorporated. We have handled thousands of cases, and we are ready to take immediate action to help you get out of debt!