How do I claim bankruptcy as an individual?

Bankruptcy can be a scary concept to face. However, it can be very useful for people that are suffering from their finances. Do not stray away from bankruptcy due to the stigma surrounding it. It can be helpful if you are facing a situation where you are unsure of your financial future. As an individual that needs to claim bankruptcy, you may go through one of two processes. These processes are Chapter 7 and Chapter 13. These two options give you the opportunity to get your finances in order to improve your situation and hopefully build a better future for your finances.

You must be eligible before you file for either bankruptcy method. Prior to filing for Chapter 7 bankruptcy, individuals need to go through credit counseling by a United State-approved agency and attend a debtor education course to better their understanding of their finances. They must pass a means test as well, which compares their income to the median income in the country. They can be eligible for bankruptcy if their income is below the median income in the United States. If it is above the median income, you may not be eligible. However, exceptions have been made before so it is not impossible.

A petition for bankruptcy must be completed to begin the bankruptcy process. In this petition, you will be asked to claim a list of all debts, an account of your income, your monthly living expenses and a list of all assets, including real estate and personal possessions. When the paperwork is completed, the automatic stay will go into effect to bar any creditors from contacting you. This can help to alleviate any pressure you are facing. Since they are unable to contact you about the money you owe, it may help to alleviate the stress that you have been dealing with.

Is Chapter 13 bankruptcy different?

The process for filing for Chapter 13 bankruptcy is similar to that of Chapter 7 bankruptcy, but there are certain eligibility requirements that are different. You need to receive credit counseling within 180 days before filing. If you tried to file another petition and it was dismissed within the 180 days, you cannot file again. Once you file for bankruptcy, you should include documents such as a list of liabilities, assets and property, a statement of financial affairs, a list of executory contracts and unexpired leases, proof of credit counseling and any plan developed to handle the matter, income payments within 60 days prior to filing, monthly net income and any indication in a rise of income or expenditures and interests the debtor has in state or federally-qualified education or tuition accounts. An automatic stay will go into effect for this process as it does for Chapter 7 bankruptcy.  

Before taking any sort of legal action, it is important to discuss your legal matter with an experienced attorney. Contact The Radol Law Firm to discuss any divorce and family law matters you may be faced with.