Saturday, June 16, 2012

Chapter 7 vs. 13

Can I file a Chapter 7 or will I be required to pay debt over time through a Chapter 13? While many factors play a role in answering this question, here are two important calculations:
  • If your debts are primarily consumer debts, and your family's income is over the median annual income for a family of its size, you are probably required to file Chapter 13.  Here is a link to the U.S. Trustee's state-by-state table of median income: MEDIAN INCOME TABLE, This table is adjusted periodically. More goes into calculating your eligibility than the median income amount, but the Trustee's table is a good starting point.
  • Have you filed bankruptcy before? You are not eligible for a discharge in a Chapter 7 if you filed a prior Chapter 7 in the last 8 years, or a prior Chapter 13 in the last 6 years (unless you paid most/all of your debt in that prior Chapter 13). Whereas, you can receive a discharge in a Chapter 13 if you filed a Chapter 7 more than 4 years ago. Keep in mind that you can still file a Chapter 13 even if 4 years has not elapsed; you simply would not be eligible for a discharge. You might not care though since having the protection of the Bankruptcy Court may be more important to you than receiving a discharge.

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.