Individuals can claim bankruptcy through two different processes. This includes Chapter 7 and Chapter 13 bankruptcy. They may be able to work with an attorney to fix their financial situation. Chapter 7 is best known for being the process that requires liquidation. This can prove to be beneficial for some individuals as it will allow them to pay back their debts. Chapter 13 bankruptcy is more known for its repayment plan. During this process, individuals can develop a repayment plan with their attorney to satisfy creditors.
What Are the Prerequisites for Chapter 7 Bankruptcy?
Before applying for bankruptcy, individuals should make sure they are considering all options that are available to help fix their financial situation. At this time, they will need to ensure that they meet the requirements that are needed before filing for bankruptcy. Chapter 7 bankruptcy has certain requirements that people must complete before they are able to file for it. Individuals have to go through credit counseling and attend a debtor education course to prepare for this process. In addition to these requirements, they must pass a means test. This test is used to compare their income to the median income in the United States. In order to be eligible to claim their individual bankruptcy, their income has to be below the median income. However, there has been cases where they can be approved even if their income does not fulfill that standard.
How Does the Process Continue?
Once you have met the eligibility requirements that are required for Chapter 7 bankruptcy, a petition for bankruptcy must be filled out. In this petition, you will have to claim a list of all your debts, an account of your income, monthly living expenses and a list of assets. Once the paperwork is completed, the automatic stay goes into effect immediately to bar creditors from contacting debtors during this process. Creditors are no longer able to harass debtors for the money that is owed to them once the automatic stay goes into effect. This can be beneficial for debtors since they will not have to face the added stress of creditors contacting them. With this in mind, the automatic stay may even be able to prevent foreclosure. There are certain circumstances that can help these individuals.
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.