When individuals are faced with times of financial difficulty, they may be able to improve their situation by turning to Chapter 7 or Chapter 13 bankruptcy proceedings. With these forms of bankruptcy, individuals are able to get the help they need to focus on and improve their finances. They may be able to prepare themselves for a better financial future. These bankruptcy proceedings are better fitted for individuals who are eligible to claim bankruptcy, rather than a business that wants to claim bankruptcy. Businesses should consider Chapter 11 bankruptcy to improve their situation.
Before individuals go through either bankruptcy process, individuals must complete the requirements for the claim. After the paperwork is filed for both processes, the automatic stay goes into effect. This bars creditors from contacting debtors. With this in place, debtors do not have to worry about facing harassment from creditors. Instead, they can focus on fixing their finances.
What’s Involved in Chapter 7 Bankruptcy?
Individuals have to undergo credit counseling and attend a debtor education course to prepare for this process. They must also pass a means test that compares their income to the median income in the United States. In order to be eligible to claim bankruptcy, their income has to be below the median income. However, there have been cases where they can be approved even if their income does not fulfill that standard.
Once you have met the eligibility requirements, a petition for bankruptcy must be filled out. You will have to claim a list of all your debts, an account of your income, monthly living expenses and a list of assets.
How Does Chapter 13 Bankruptcy Work?
Filing for Chapter 13 bankruptcy is similar to the process that individuals go through for Chapter 7 bankruptcy. Eligibility requirements need to be met first, which requires individuals to undergo credit counseling 180 days before filing for bankruptcy. If you previously filed a petition that was dismissed within that 180 days, you cannot file again.
Once you file for bankruptcy, you should include documents that outline a list of liabilities, assets and property, a statement of financial affairs, a list of executory contracts and unexpired leases, proof of credit counseling and any plan developed to handle the matter, income payments within 60 days prior to filing, monthly net income and any indication of a rise in income or expenditures and interests the debtor has in state or federally-qualified education or tuition accounts. As with Chapter 7 bankruptcy, an automatic stay goes into effect for Chapter 13 bankruptcy as well.
Juan C. Velasco, Esq. is a trusted attorney who concentrates on bankruptcy, family law, real estate, and estate matters who has been serving the New Jersey area for over 25 years. If you are in need of experienced legal counsel, please contact Velasco Law Office and we will be happy to assist you.