Eligibility Requirements For Chapter 7 Bankruptcy

When you file for personal bankruptcy such as a Chapter 7

, the courts require that you meet certain income eligibility requirements. If you don't meet these requirements, the judge will rule that you can't file for bankruptcy.

The income eligibility requirements for a foreclosure filing are based on a variety of factors. Your income, your monthly living expenses, and your overall debt load all come into play. The courts in each state will use a set of specialized calculations, specific to that state, to determine if your bankruptcy case can go forward.

When trying to determine if you are qualified, the court will look at the various types of debt that you have and break them into categories. One of the most important types of debts is secured debts.

So, what exactly is a secured debt? It is debt where if you fail to pay the lender according to the terms of the contract, he can repossess the property used to secure the loan. Probably, the most well known type of secured debt that Americans are familiar with is the home mortgage. If you miss a certain number of payments and default on your mortgage, the creditor can begin foreclosure procedures to take ownership of the home.

There are a number of additional ways that an unsecured debt can become a secured debt. As an example, if a home contractor completes work on your home and you fail to pay him, he may file a lien against your property. Once he does this, your home becomes a secured debt. You cannot sell your home before the lien amount is paid off.

Your home equity loan is also considered a secured type of debt. This kind of loan is really a second mortgage. As a result, the rules for defaulting on it are pretty much the same as the rules for defaulting on your primary mortgage. Less expensive types of secured debts are things such as cars, boats, trailers, and so on. When you sign the sales contract to purchase these items, you are promising that if you fall behind in your payments, that the lender can repossess the property from you.

The debts mentioned above are some of the more common secured debts. But there are many other less common types of secured debts as well. A lot of times when a bank gives a personal loan to a person, they will ask for collateral. If somebody sues you and wins a monetary award, depending on the state, a lien can be placed on your home as well as other personal property that you may own. And, lastly, taxing authorities such as the IRS can secure a lien against your home to collect back taxes.

When you file for bankruptcy, detailing your list of secured debts is an important point in helping the judge to decide to let your bankruptcy request go forward.

Eligibility Requirements For Chapter 7 Bankruptcy

By: David Hoyer

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