Can I submit a bankruptcy?
Bankruptcy is a legal process aimed at allowing individuals or business to balance all their debts when they find that they are unable to fulfill their obligations. There are two commonly used options in the United States by submitting bankruptcy protection; Chapter 7 and Chapter 13. Each chapter has separate capability criteria to determine which option is best.
In addition to these two known types, there are 4 more. Chapter 9 is a municipal bankruptcy, Chapter 11 is a business reorganization, Chapter 12 applies to family farmers and fishermen and Chapter 15 is for auxiliary and international companies. The vast majority of bankruptcies in the US is Chapter 7. It is important to note that this option is only to settle unsecured debts such as credit cards, personal loans, the remaining balance on the car loans after Repossession and Medical Accounts.
Set -upBaked loans, such as car loans and mortgages, cannot be settled according to Chapter 7. These assets will be confiscated by the creditor, which will result in re -taking the car and closing the house. You cannot apply for bankruptcy to release student loans, taxes, fines, child and spouse support and legal settlement.
In 2005, the US government accepted several significant changes in bankruptcy laws, the most important thing is the "average test". Within this part, when the debtor is submitted to bankruptcy, he must provide his monthly income based on the average in the last six months. This test applies only to the debtor whose income is above the average income of the state.
deductions for obligations that are not included in submitting an application for bankruptcies are deducted from monthly income. Standard values for the cost of living are deducted on the basis of status and a one -time income is the value that remains. IfThis value is higher than $ 182.50 per month, you must submit bankruptcy in Chapter 13.
If a one -time income is less than $ 6,000, you are entitled to Chapter 7. If it is higher than $ 10,000, you do not qualify. If it falls between $ 6,000 and $ 10,000 and you can pay at least 25% for unsecured debts, you must file chapter 13.
In bankruptcy in Chapter 13, the debtor maintains the ownership of all assets and must make monthly payments in the next three to five years to repay the creditors. If you have funds to pay at least part of your debts, you can submit bankruptcy according to Chapter 13.
If you are able to pay only monthly minimum payments, contact the credit advisor. There are alternatives to bankruptcy that can help. These possibilities, including the statement of a lower interest rate and payment of part of the total debt.