If you are burdened by a significant amount of debt that you can’t seem to pay off on your own, you might start to believe that all hope is lost. However, when you file for bankruptcy, you’ll have the opportunity to pay off your creditors as best you can and give yourself a clean slate.
But, you might be wondering whether you qualify for a bankruptcy declaration. With this in mind, we describe the most commonly sought bankruptcy declarations and their qualifying requirements.
Qualifications Based on Bankruptcy Type
The criteria for being able to declare bankruptcy will vary depending on which type of bankruptcy you are interested in pursuing. There are three main types of bankruptcy: Chapter 7, Chapter 13, and Chapter 11. Continue reading to learn more about the requirements for each type of bankruptcy declaration.
In order to qualify for a Chapter 7 declaration, you’ll have to pass the means test. This test deducts certain living expenses from your monthly income—what remains will be considered disposable. If you pass, meaning you don’t have disposable income to repay your creditors, then you’ll be able to declare Chapter 7. Your assets will be liquidated and sold, and then your remaining debts will be discharged.
If you’re considering Chapter 13, then you’re likely trying to repay your creditors to the best of your ability. To qualify for Chapter 13, you’ll need to have no more than $395,000 in debt, such as personal loans or credit cards. Your secured debts, including your mortgage, cannot exceed $1.184 million in order to qualify for a Chapter 13 declaration.
Business owners are typically the individuals who will pursue a Chapter 11 bankruptcy declaration. This is very similar to a Chapter 13 declaration in that you’ll be expected to repay your creditors over a set period of time. To qualify, you’ll generally need to be a part of a partnership or corporation and have a way to repay your debts as outlined in a court-approved reorganization plan.
Consult an Indiana Bankruptcy Lawyer
For more information about filing any type of bankruptcy, reach out to an experienced Indiana bankruptcy lawyer at Rowdy G. Williams Law Firm as soon as possible. You can call our office at 1-812-232-7400 or complete the convenient contact form at the bottom of this page to schedule your free consultation today.