In the present recession, there is a drastic rise in the number of people confronting debt problems. People are discovering themselves up to their necks in debt. A minority of people are able to remove their encumbrances by taking advantage of debt relief programs like debt settlement services. Others are devastated and are left with only the resort of bankruptcy.
This last group should be aware of the requirements of filing bankruptcy before actually filing. At one time, every debtor in the USA had the right to file for bankruptcy under chapter 7. But since the bankruptcy laws changed in 2005, it has become more difficult for every debtor to qualify for filing a chapter 7 bankruptcy. They now need to meet certain criteria for filing a bankruptcy under chapter 7.
Below are some of the important considerations for filing bankruptcy:
1. Filing for Chapter 7 bankruptcy is not an easy task, but it is achievable. The bankruptcy court will require you to pass a Means Test (bankruptcy form 22A. This will decide whether you are eligible for a chapter 7 bankruptcy. Your monthly income level is measured against the median of your state and your allowable expenses are also taken into account. You may or may or may not be able to file for a chapter 7 bankruptcy, where all debts are discharged. If you do not meet the criteria for filing a chapter 7, you may have to file a chapter 13.
2. Filing bankruptcy under chapter 13 does not require a means test to ascertain your monthly income. If it is determined that you can pay back some or all of your debts over a period of time, you will be put on a payment plan of no longer than five years. However, it also depends on the amount and type of debt that you owe.
3. When you file for bankruptcy, you must abide by all the terms and conditions related to it in order to get the bankruptcy discharge. You need to abide by all federal, state, and local rules and regulations or your case could be dismissed.
All required forms need to be filed correctly and in the right jurisdiction
Good luck to all.
This article was guest authored by Anya Bennett, and edited by epiphany.