As millions will see in 2011, a personal bankruptcy can relieve you of your post-recessionary hangover, helping you dispense with debts accumulated during tough economic times and get you back on the road to financial freedom. And, while choosing bankruptcy has become an easier for so many average Americans seeking respite from their economic woes, which bankruptcy to choose can be a tougher decision.
Whether you choose a Chapter 13 repayment plan that allows you to save your home from foreclosure, or the quick disposal of unwieldy debt under Chapter 7, you can stop creditor harassment and drop your debt load with either personal bankruptcy. But which bankruptcy is available to (or right for) you?
Here’s a quick comparison of the eligibility requirements for Chapter 7 and Chapter 13:
If your debts are primarily consumer debts…
Then you will have to pass the Means Test in order to qualify for the ever-popular safe havens of a Chapter 7 bankruptcy. Bankruptcy’s Means Test involves a comparison of your income to state medians in order to determine your eligibility for Chapter 7.
If your income is below the median standard for your state…
If you income is below the median income published for your state, your are most likely eligible for either Chapter 7 or Chapter 13 relief. However, there are other factors involved which may determine which Chapter is most beneficial, and the smoothest road to the relief for you and your family. If, for example, you have over $100,000.00 of unsecured debt, the courts may raise concerns about the "good faith" of your Chapter 7 filing, which might be more problematic in a Chapter 7 than a Chapter 13. It is best to consult with an attorney who is familiar with the Judges and Trustees in your jurisdiction.
If your income is above the median standard…
In Chapter 7, the Means Test is triggered and your eligibility is based on, among other things, your ability to pay back your creditors in a hypothetical Chapter 13 plan . The role of the Bankruptcy Administrator and U.S. Trustee is to push higher income Debtors into Chapter 13 plans where there is at least a potential for some repayment to unsecured creditors. However, even in the great majority of "above median cases", unsecured creditors get, at most, pennies on the dollars for the debts you owe. It is therefore extremely important that you have an experienced attorney who understands the complexities of the means test and can determine 1) Whether you are eligible for Chapter 7 relief and 2) if not, provide you with the most affordable Chapter 13 plan possible.
As a result of the nuances and intricacies of Chapter 7 and 13 bankruptcies, if you find yourself facing insurmountable debt, it is essential to begin the bankruptcy process with someone in your corner. An experienced bankruptcy attorney can be the most important player in the bankruptcy game; he not only knows how to match up to your opponents and can provide some great assists throughout your case, no matter who your creditors are, but he is also the only person responsible for looking out for your best interests. Contact the Law Offices of John T. Orcutt in North Carolina TODAY for a totally FREE debt consultation. Just call toll free to +1-919-646-2654, or make your appointment online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button.