The debtor may often ask ‘if bankruptcy is the right decision for me?’. This is so because bankruptcy may be seen as a dishonor or disgrace to their reputation. Consequently, a person not able to clear off his loans is more dishonorable than bankruptcy. In bankruptcy, the debtor is trying to clear some part of the debt, which may not be otherwise possible. The debtor when realizes that in no circumstances, he will swim through the loans successfully, and ultimately drown, must take rescue in bankruptcy. Detail information is available on- https://bankruptcy.recoverylawgroup.com/
Qualifying for bankruptcy
The government of the USA has designed bankruptcy to help people stuck in bad loans. The law is quite poignant and not all can qualify to file for bankruptcy. This is so because the Government wishes to prevent misuse and help only the genuine needy ones. The debtor can file bankruptcy under two chapter- 7 & 13. Both have their own qualifying terms, that the applicant must clear. Other loans apart from student loans can seek bankruptcy. Exceptional cases of student loan are only allowed for bankruptcy.
Qualifying for Chapter 7
In chapter 7, a percentage of debt amount is fixed to be cleared within 90 days of the hearing. A mean test can be taken by the debtor to verify his suitability. The mean test consists of comparing his past six months monthly salary to the median income of the state in which he/she resides. Median income may differ from State to State in the USA. The client’s income should be less than the median income to qualify for bankruptcy. The client’s non-exempted properties and assets are then sold to clear the debt.
Qualifying for Chapter 13
While you may lose some of your properties in chapter 7, you can save it by filing bankruptcy under chapter 13. The process is the same, paying off a designated debt amount, but in installments within 3 to 5 years of the time period. The debtor does not need to clear a mean test for chapter 13. On the contrary, if he fails, i.e. if his income is less than mean income, he may not be suitable for chapter 13 and the case can be dismissed.
Chapter 13 is good for people with steady income resource, stuck in child support bill or income tax debt. The client can also apply for chapter 13 after applying for chapter 7, within 8 years of hearing. Chapter 13 not only discharges some percentage of debt amount but also helps the debtor retain his assets.
Taking a decision to file for bankruptcy must be taken after analyzing the pros and cons of both the chapter. Although bankruptcy is a good procedure, it is an individualized decision, suiting one’s own debt profile. A professional help goes a long way in clearing the confusion and arriving at the right decision. For advice and consultation on bankruptcy call on- 888-297-6203.