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If you are struggling with serious debt that you are unable to pay off by any other means, you may be eligible to file for bankruptcy. There are several different chapters that bankruptcy is classified under, and different types within each classification. A Chattanooga lawyer could help you determine your eligibility for a bankruptcy filing that would suit your needs and allow you to navigate the complex laws surrounding it.
Almost any person or company that owns property or has a business in the United States can file for Chapter 7 bankruptcy. Most Chapter 7 bankruptcy cases are filed for individuals, not large companies.
A bankruptcy filing can be either voluntary or involuntary. Voluntary bankruptcy means the debtor chooses to file for bankruptcy and ask for help. Involuntary bankruptcy means somebody other than the debtor makes the bankruptcy filing, and these cases are only filed under Chapter 7 or 11 of the bankruptcy code.
If the case is filed by creditors, there must be only three of them, and all of the debt has to equal more than $10,000.00. If the debtor is a partnership, the case can be filed by fewer than all of the partners, but there are some important exceptions.
A person can still file for Chapter 7 bankruptcy if they have another Chapter 7 case within the last eight years. However, they cannot file for Chapter 7 bankruptcy if the court dismissed their prior case because they committed violations, such as selling assets to relatives and friends for less than the fair market value, running up debts for luxury items without a way to pay them off, or hiding money or property from a business partner, among other actions.
Chapter 13 is often called a wage earners plan. While Chapter 7 bankruptcy can liquidate debt, Chapter 13 bankruptcy can reorganize it and construct a plan for the debtor to pay it off under the court’s supervision.
Any individual who is either self-employed or operating an incorporated business is eligible for Chapter 13 relief as long as their unsecured debts are less than $394, 725 and their secured debts are less than $1,184,200. This number may be subject to change based on the consumer price index. A corporation or partnership in Chattanooga may not be eligible for Chapter 13 bankruptcy.
Qualifying for Chapter 7 bankruptcy means that an individual has an income that is below the median income set by the Department of Justice for their area and/or their allowable expenses reduce their income below that threshold, and most or all of their debt is consumer debt.
Other rules apply if the debtor is a partnership or a company. If the Means test shows that the debtor has more than about $200 per month in disposable income after paying all reasonable and necessary expenses, they must file for Chapter 13 bankruptcy instead of Chapter 7.
Chapter 13 acts like a consolidation loan. It allows the debtor to keep rescheduled secured debts on their homes and cars and make reasonable payments based on their resources. A local lawyer could further explain the differences that cause a debtor to qualify for one form of bankruptcy over the other.
It is important to know which form of bankruptcy you are eligible for before you make the decision to file. A skilled legal professional could carefully examine your specific situation and tell you how to best proceed. A Chattanooga lawyer could be a crucial advocate while you undergo the stressful process of filing for bankruptcy and ensure that you have no remaining questions about your eligibility. For more information, call today to schedule an initial consultation.