There are two types of personal bankruptcies: Chapter 7 and Chapter 13. Depending on your individual situation, you may or may not qualify for one chapter or the other. Determining which chapter you qualify for with the help and guidance of a Kain & Scott attorney is an important step towards making the decision to file for bankruptcy.
Most often, debtors want to know if they qualify for a Chapter 7 bankruptcy –which is commonly referred to as a “fresh start” bankruptcy and lasts between 4-6 months. To be able to qualify for a Chapter 7 bankruptcy a debtor must have no prior bankruptcies within the last 6-8 years. This length of time is determined by which type of bankruptcy a debtor has filed previously.
Secondly, to qualify for a Chapter 7, a debtor must pass the Chapter 7 bankruptcy means test. The means test is a calculation of a debtor’s annual income and also takes into account the amount of nonpriority unsecured debt one has as well. If this calculation works out so the household’s median income is less than the Minnesota state average or the debtor’s net income is less than 25% of their nonpriority unsecured debt, the debtor can qualify for a Chapter 7 bankruptcy.
If a Chapter 7 isn’t in the books for you, you may qualify for a Chapter 13 bankruptcy. A Chapter 13 is essentially a 3-5 year repayment plan. You make monthly payments you can afford for no more than 5 years and all of the remaining balance of your debt is wiped away.
To hop of a Chapter 13, a debtor must have the ability to make payments on their Chapter 13 plan and their debt must not exceed the debt limits. These limits are $1,184,200 in secured debt and $394,725 in unsecured debt.
Eligibility for each chapter is best discussed with an experienced Kain & Scott bankruptcy attorney.
Debt relief options are available to you! Schedule a consultation with MN’s NICEST bankruptcy law firm to discuss them today at www.kainscott.com