3 Big Questions About Bankruptcy
Bankruptcy law can seem intimidating, especially if you've never dealt with it before. Unsurprisingly, it's normal for people to have questions for a bankruptcy attorney services provider. Let's look at three of the biggest ideas folks filing for bankruptcy should try to understand.
Who Can File?
In the strictest sense, anyone can file for bankruptcy. However, the court has a quick process for rejecting cases that don't meet certain criteria. Fortunately, the requirements for bankruptcy are. Chapter 7, the process where a trustee sells your disposable assets to settle your debts, simply requires you to have an income that's less than half of the median income for your state of residence. If you don't meet that qualification, you can still undergo a means test to see if you might otherwise qualify.
The requirements for Chapters 13 and 11, the processes where you restructure your debts and pay a lowered among over three to five years, are less strict. Chapter 13 is usually used by people with debts in the hundreds of thousands of dollars, and Chapter 11 is typically used by businesses with millions in debts. The trade-off with these processes is you'll have to submit a plan to the court explaining how you'll pay your creditors.
How Often Can You Declare Bankruptcy?
People filing Chapter 7 must wait 8 years before they're eligible to file Chapter 7 again. Those filing Chapter 13 must wait two years between filing dates. There are no limits imposed on Chapter 11. However, creditors have stronger rights in Chapter 11, and they can object to a plan or even submit an alternative one. Likewise, you can pursue a Chapter 13 immediately after debts are discharged under Chapter 7. The idea here is to restructure certain debts once others are discharged. For example, you might restructure your mortgage after the court has discharged what you owe on credit cards.
Will Bankruptcy Appear on Your Credit Record?
Yes, credit reporting companies have the right to list bankruptcies on people's records. Chapter 13 cases come off a petitioner's record after 7 years, and Chapter 7 cases come off after 10 years. Chapter 11 cases usually hang over businesses permanently because they're often considered newsworthy.
However, getting your debts under control will usually help your credit score in the long run. After all, creditors want to know that your finances are squared away, and bankruptcy law services can help with that.