The option to file bankruptcy was instituted by the Federal Court to give consumers a fresh start by eliminating unsecured debt. One of the most attractive characteristics of a Chapter 7 bankruptcy is that enables consumers to wipe out most of their debt and start a clean slate. Not everyone qualifies for a Chapter 7 filing. Eligibility to file under under the Chapter 7 code is determined by the following:
- How much of income you earn.
- Amount of debt you owe.
- How much of property you own.
To file under a Chapter 7 code, you will need to be a moderate to low income earner. Factors that determine how much you earn are influenced by where you reside, what your cost of living is and your total paycheck deductions. Income levels are measured against the average median income levels provided by the census bureau. Since the Chapter 7 code is designed to accommodate various individuals based on their circumstances, eligibility to file under Chapter 7 is determined on a case to case basis.
The debt requirement is not determined by fixed minimum and maximum parameters. Debt that is considered substantial varies from one individual to the other. A debt of $60,000 sounds overwhelming to a person who makes $120,000 per year, a debt of $4,000 can be just overwhelming on an annual income of $30,000. Each situation is unique.
One of the most common misconceptions of a Chapter 7 bankruptcy filing is that you risk losing all of your property. Assets like your home, car and bank account up to a certain value are protected by bankruptcy law. The amount is state specific, and if your assets are valued above the maximum amount, you will be required to surrender those assets to pay creditors. In the majority of cases, bankruptcy filers are permitted to keep their assets.
Depending on which state you live in, you may be entitled to State exemptions or Federal exemptions, each of which is designed to protect assets in different ways. It is recommended to consult with an attorney to safeguard your assets during your bankruptcy filing.
If you would like learn more about all things bankruptcy, feel free to contact us on (888) 433 8444