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Bankruptcy is usually the last option someone may have to help them out of debt. O’Flaherty law lawyers understand that dealing with an immense debt can affect someone tremendously. This article will outline what happens when you file for bankruptcy by answering the following questions:  

  • How to file for bankruptcy?  
  • Who qualifies to file for Chapter 7 bankruptcy?  
  • What is a good reason to file for Chapter 7 bankruptcy?  
  • Who qualifies to file for Chapter 13 bankruptcy?  
  • What is a good reason to file for Chapter 13 bankruptcy?  
  • What is debt consolidation, and is it better than filing for bankruptcy?  

Calculating credit card debit

How Do I File for Bankruptcy?

A chapter 7 case begins with filing a petition in the bankruptcy court in the area where the individual lives, where the business debtor is organized, or where a business has its principal place of business or principal assets. A chapter 13 case begins by filing a petition with the bankruptcy court serving the area where the debtor has a domicile or residence.  

Suppose you file for bankruptcy without an attorney. In that case, you are expected to follow all rules and procedures in bankruptcy court and abide by all federal and local bankruptcy laws. Hiring a bankruptcy attorney is not required, and anyone may file a bankruptcy case independently.  

Bankruptcy is a complex process, and hiring an experienced O’Flaherty Law Bankruptcy Attorney would only benefit someone considering whether to file. A bankruptcy lawyer can advise you of the consequences of filing, which bankruptcy may be best for your situation, determine which property will be safe from bankruptcy, and explain the procedures of bankruptcy law.  

 

Chapter 7 Bankruptcy

Who qualifies to file for Chapter 7 bankruptcy?

An individual, a partnership, a corporation, or a business entity may file for Chapter 7 bankruptcy. However, some things can prevent someone from being able to file.  

  • A debt counseling course must be completed with an approved credit counseling agency no more than 180 days before the applicant files.  
  • The same application cannot have filed a Chapter 7 bankruptcy within the previous eight years.  
  • A Chapter 13 bankruptcy cannot have been filed by the same applicant within the previous six years.  
  • Filers for Chapter 7 or Chapter 13 bankruptcy whose cases were dismissed must wait at least 181 days before another attempt.  
  • Filers must undergo a test of financial scrutiny. Your average monthly income for the previous six months must be less than the median income for a household of the same size in your state. You must pass a means test to determine whether you have sufficient disposable income to make partial payments to unsecured creditors.  

Nevertheless, a filer may still be able to file a chapter 13 bankruptcy even if they fail the means test mentioned in the last bullet point. Even if you qualify to file a chapter 7 bankruptcy, but the court determines that you’re attempting to defraud your creditors, the court may dismiss your case.  

O’Flaherty Law Bankruptcy Attorneys are ready to assist you in determining whether you qualify to file a Chapter 7 bankruptcy; call us today!  

A person trying to figure out bankruptcy paperwork

What Is A Good Reason To File For Chapter 7 Bankruptcy?  

There are many reasons that someone would file for bankruptcy. Some reasons include  

  • Unsecured debts total more than half of annual income  
  • It could take five years or more to pay off debts  
  • Little to no disposable income even when seriously budgeting  
  • Monthly income is below the median level in your state  

It is important to remember that bankruptcy is a big step that can bring serious consequences. Before filing, you may want to seek the advice of a lawyer to see if chapter 7 bankruptcy is the best option for you.  

Chapter 13 Bankruptcy

Who qualifies to file for Chapter 13 bankruptcy?  

Any individual can file for a Chapter 13 bankruptcy if unsecured debts are less than $419,275 and secured debts are less than $1,257,850. You may not file a chapter 13 bankruptcy if  

  • within 180 days before filing a new bankruptcy  
  • a prior bankruptcy was dismissed because you failed to follow a court order  
  • you requested dismissal for a prior bankruptcy  

An individual filing a Chapter 13 bankruptcy must complete a debt counseling course with an approved credit counseling agency no more than 180 days before the applicant files.  

 

What Is A Good Reason To File For Chapter 13 Bankruptcy?

There are many reasons why you could be considering filing for a Chapter 13 bankruptcy. Some of those reasons are:  

  • You filed a Chapter 7 bankruptcy within the last eight years but are still being crippled by debt  
  • You are worried about foreclosure or repossession  
  • You have outstanding utility bills, medical bills, student loans, and credit card debt  
  • You are having financial trouble after separation or divorce  
  • You have been a party to a lawsuit, are having wages garnished, or bank accounts have been frozen  

Bankruptcy is a big decision. Before filing, you may want to seek the advice of a lawyer to see if a chapter 13 bankruptcy is the best option for you. An experienced O’Flaherty Law Bankruptcy Attorney can help you through the process of finding the best options for you.  

Paperwork for petition to file for bankruptcy

What Is Debt Consolidation, And Is It Better Than Filing For Bankruptcy?

Debt consolidation takes all your debt payments and merges them into one payment. Debt consolidation allows someone to continue paying off loans without putting bankruptcy on their record. Consolidation can happen in many ways, like applying for  

  • a 0% interest, balance-transfer credit card  
  • A fixed-rate debt consolidation loan  
  • a home equity loan  
  • a 401(k) loan  

There may be other options for consolidation as well. Whether debt consolidation or bankruptcy will be better depends on your situation, like your income, what your debts look like, etc. If you are underwater in debt and there is no surfacing in sight, debt consolidation may not save you from drowning. Speaking with a bankruptcy attorney and reviewing your financial situation could help you determine your best option.  

 

Please visit and read some of our other articles to learn more about bankruptcy. If you need help determining whether you should file for bankruptcy or you want to initiate a bankruptcy proceeding, please reach out to us. To request a consultation with an O’Flaherty Law Bankruptcy Attorney, call our office at (630) 324-6666. You can also fill out our confidential contact form, and we will get back to you shortly.

Posted 
August 24, 2022
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