One of the most common questions that we hear is “Do I qualify for Bankruptcy?” If an individual or married couple is having trouble keeping up with their monthly bills; resorting to credit cards or personal loans; behind on their mortgage, rent or car payments, a Bankruptcy filing is most likely the answer.
One’s ability to file a Bankruptcy depends mostly on their affordability or lack thereof to pay towards their creditors. To determine if one qualifies for Bankruptcy generally depends on household income, household size, and reasonable household expenses.
After paying necessary and monthly expenses such as mortgage or rent, car payment, food, gas, clothing, cell phone, cable, and recreation; if disposable income exists, said disposable income can be used to pay towards or a portion of unsecured debts. A repayment plan in Bankruptcy is accomplished through a Chapter 13 matter which is often referred to as a Debt Reorganization Plan.
A Chapter 7 Bankruptcy is referred to as a straight bankruptcy. Unlike a Chapter 13 matter, a Chapter 7 does not have a repayment plan. It is presumed that if one’s income is less than the median income standards by family size, that person(s) is eligible to file a Chapter 7 Bankruptcy and need not enter into a repayment plan to their creditors. The median income standards by state can be found here.
Every situation is different and this post is intended only to provide a broad outline of whether you may qualify for Bankruptcy relief. It is always best to sit down with an experienced bankruptcy attorney regarding your particular financial situation.
Please call 215-545-0008 or 856-890-9003 to schedule your free initial consultation with a lawyer in one of our offices located in the Greater Philadelphia region. We look forward to helping you!