Qualifying For Bankrupcty

- Is it the right option for you

Bankruptcy is a federal court process designed to help individuals and businesses eliminate their debts or repay them under the protection of the bankruptcy court. Bankruptcies can generally be described as liquidation or reorganization.

Under a liquidation bankruptcy (Chapter 7), a claimant files to eliminate debt through the bankruptcy court. Under a reorganization bankruptcy (Chapter 13), a claimant files a plan with the bankruptcy court proposing how to repay creditors. In 2005, the requirements under which a debtor could file Chapter 7 bankruptcy changed with the passage of the Bankruptcy Abuse Prevention and Consumer Protection Act.

Debtors are now required to seek budget and credit counseling within six months of filing, financial "testing" is required to determine the debtor's capacity for debt repayment, Chapter 7 often cannot be filed if the debtor's household income is greater than the median household income for the state, and state exemptions cannot be applied unless the debtor has resided at his or her current residence for more than two years.

Due to the imposed requirements for Chapter 7 bankruptcy as set forth by the new laws, some debtors who were previously eligible to file under Chapter 7 now have to file under Chapter 13 bankruptcy instead, in which individuals and creditors agree to a court-imposed plan that requires some or all debts be repaid over a three to five year period, with an appointed trustee assigned to monitor the repayment process. Bankruptcy filings will continue to be recorded on an individual's credit report for seven years in the case of Chapter 13, and up to ten years for Chapter 7.

Not all debts can be discharged in bankruptcy. The most common types of non-dischargable debts are taxes, spousal support and student loans. The lawyers at Kevin Goff, PC can help our clients plan for bankruptcy so as to maximize the number of debts discharged so our clients can have a meaningful chance at a fresh start after bankruptcy.