Generally there are 2 types of bankruptcies that are made available to consumers, which are the chapter 7 and chapter 13. Let us now take a closer look at each of them, and the specific requirements for filing them.
Also known as straight insolvency, this is the most common kind that is permissible to be filed by the law, by both consumers and businesses alike. To file for this type of foreclosure , your current income needs to be at least at the same level as the median amount set in your given state. Chapter 7 bankruptcy entails the disposal of your non-exempt assets ( those that can be sold). The proceeds of which are handed to a court assigned trustee, who is entrusted with the task of paying of your creditors. After the successful filing of your petition, all creditors are barred from directly collecting money from you.
The kinds of debts that are exempted from this kind of bankruptcy include spousal and child support, back taxes that are below 3 years old. Properly executed contracts that involve titles or liens like land or automobiles, criminal fines and student loans.
When your non-exempt assets have been liquidated and creditors paid off, the rest of your debt like as credit card debts can be nullified by the court. You can opt for this insolvency if you cannot possibly repay most of your debts. You don’t possess any debt with co-signers. You are on the brink of been slapped with a lawsuit by your creditors or you wish to protect your exempt assets and income.
This is the other most common types of bankruptcies , and it entails the restructuring of your accumulated debts into a lenient repayment schedule not more than 5 years. Largely depends on your exact income, the amount of debts and their nature, you can be able to repay from 10% to 100% of your accumulated debt. This option is only made available for individuals whose income is well above the median sum that has been set in their given state. Or those that have an adequate income, which allows them to repay at least 25% of their unsecured debts. In many occasions, judges have the power of reducing debts owed to creditors who reject to negotiate an ideal repayment plan.
The type of debts exempted from this sort of insolvency include spousal and child support, drunk driving fines, criminal fines and students loans. You can file this type of foreclosure if you have filed a chapter 7 petition within the last 6 years. Possess debts with other co-signers. You are in a position of repaying your debts within 3 to 5 years. Your income prevents you from filing a chapter 7 bankruptcy petition. You are lagging behind a mortgage repayment or have back taxes. You have assets that can be liquidated if you file for chapter 7.
Regardless of the types of bankruptcies that may be laid out for you according to your distinct circumstances, you will still be obliged to attend mandatory credit counseling prior to filling your petition. This is, for the most part, a 90 minutes session within 6 months of filing your insolvency petition. In the particular case of chapter 13, this stipulation presents an excellent platform for developing your proposed debt repayment plan.