This Bankruptcy FAQ will provide you the information you need to make an educated decision. If you have specific questions about when to file for bankruptcy, contact Ziegler Diamond Law today to schedule your free initial consultation with a proven Florida bankruptcy lawyer.
- Chapter 7 – also known as ‘liquidation bankruptcy,’ involves selling non-exempt assets to pay off creditors
- Chapter 11 – which allows businesses to reorganize their debt and operations
- Chapter 13 – a type of reorganization bankruptcy for those with regular income
- Chapter 12 – designed specifically to help family farmers and fishermen
These types of bankruptcies are defined by the U.S. Bankruptcy Code, administered by the federal court system. If you’re considering filing for bankruptcy, it’s essential to consult with a qualified attorney or credit counselor who can review your situation and provide guidance on which chapter is right for you.
You can find more information about the Chapter 7 and Chapter 13 bankruptcy process in the U.S. at the following links: The Process of Filing a Chapter 7 Bankruptcy Case & How to File for Chapter 13 Bankruptcy.
Essentially, the means test calculates whether an individual has the “means”(i.e., financial resources) to repay some or all of their debts. The test considers several factors, including an individual’s household income, expenses, and debts, to determine whether they are eligible to file for Chapter 7 bankruptcy.
The means test consists of two parts. The first part compares an individual’s household income with the state median income for their family size. If an individual’s income is less than the median income, they have essentially passed the means test and may qualify to file for Chapter 7 bankruptcy.
However, if an individual’s income is higher than the state median income, they must move on to the second part of the means test calculation. It determines their disposable income over the previous five years. If their disposable income is equal to or less than national and local standards, they may be eligible to file for Chapter 7 bankruptcy.
It’s important to note that the means test was designed to prevent abuse of the bankruptcy system, so not everyone will pass it. However, there are still other forms of debt relief available, such as Chapter 13 bankruptcy or other debt-relief alternatives.
Chapter 7 bankruptcy involves selling the debtor’s non-exempt assets to repay creditors, while Chapter 13 restructuring allows debtors to develop a repayment plan over three to five years. Navigating the bankruptcy process can be overwhelming, but seeking professional guidance can ensure you achieve the best possible outcome for your unique situation.
However, additional costs such as attorney fees, credit counseling fees, and other administrative expenses could apply. Seeking professional guidance from an experienced bankruptcy attorney can help you understand the full scope of costs associated with filing for bankruptcy and determine whether it is right for your unique financial situation.
With careful consideration of all factors, you and your attorney can decide whether filing for bankruptcy is the right decision for your financial future.
We hope our Bankruptcy FAQ was helpful! For more information about the bankruptcy process and about whether filing for bankruptcy is the most suitable answer to your financial problems, contact bankruptcy lawyer Mike Ziegler today. Ziegler Diamond Law: Debt Fighters is a consumer defense firm located in Clearwater, FL.
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