Am I Eligible to File for Bankruptcy?

If you are drowning in debt, you may be considering bankruptcy. Bankruptcy is a good way to get rid of credit card debt and other debt you may owe. However, you do have to be eligible for bankruptcy.

Eligibility depends on the type of bankruptcy. Consumers have two main options: Chapter 7 and Chapter 13. Here’s a look at the requirements for each.

Eligibility for Chapter 7

Chapter 7 is an easy way to get rid of unsecured debt. However, not everyone can take advantage of this type of bankruptcy. Here are the requirements you need to meet:

• This type of bankruptcy is not for high earners. Your average monthly income in the past six months must be lower than the median income for a household of the same size in your state. If not, then you must pass a means test. This test determines if your disposable income is high enough to make partial payments to unsecured creditors.
• You must finish an individual or group credit counseling course offered by an approved credit counseling agency within 180 days before you file for bankruptcy.
• You cannot have filed for Chapter 7 bankruptcy in the past eight years.
• You cannot have filed for Chapter 13 bankruptcy in the past six years.

Eligibility for Chapter 13

If you do not pass the means test for Chapter 7 bankruptcy, then you might be eligible for Chapter 13. Here are the requirements:

• You will be required to complete a payment plan that lasts three to five years. You must have sufficient income to make the payments outlined in your plan.
• Your unsecured debts must be less than $465,275. These include credit cards and medical bills. Your secured debts must be less than $1,395,875. This includes your mortgage and car payments.
• You must finish an individual or group credit counseling course offered by an approved credit counseling agency within 180 days before your bankruptcy filing.
• You must provide proof that you filed federal and state income tax returns for the past four years.

Fraud is Not Allowed

You will not get your discharge if you are accused of fraud. Examples include:

• Selling assets to others for less than the fair market value.
• Running up debts for luxury items without intending to pay them off.
• Concealing assets from a business partner.
• Lying about your income or debts on a credit application.

Contact Our Florida Bankruptcy Attorney Today

Bankruptcy does have some requirements, but most people do qualify. Bankruptcy can help you get a fresh start with your finances.

Florida bankruptcy attorney Brian K. McMahon, P.A. can provide you with financial relief when you need it the most. We make the bankruptcy filing process easy to understand and as stress-free as possible. Schedule a consultation today by calling (561) 658-1789 or filling out the online form. We serve the West Palm Beach, Boca Raton, Port St. Lucie, and South Florida areas.