subject: Debt Relief Services – How Would You Know That You Qualify For Insolvency? [print this page] Debt Relief Services How Would You Know That You Qualify For Insolvency?
People who file for bankruptcy are in a desperate need of a clean start from their debts which have grown out of control. There are several types of bankruptcy which are named after a chapter in the U.S bankruptcy code. They all have distinct criteria for eligibility. Out of these codes of bankruptcy chapter 7 and chapter 13 are reserved for individual debtors.
In order to determine which bankruptcy you will qualify for you need to follow the following steps:
Analysis of financial condition: For the initial step you need to get all your receipts, pay checks, bank statement and all other financial statements which show income and expense for the past six months. Then you need to calculate your earning for the period of the last six months.
Compare with state's income: To check if you qualify for Chapter 7 bankruptcy you need to compare you income with the state's median income. If you earning for the past six months have been less than the median income then you directly qualify for chapter 7 bankruptcy. If this criteria is not met then you can take a means test to determine your eligibility.
Means test: The means test subtracts your monthly expenses with your monthly income. The result is then multiplied by 60. If the outcome is $6,000 or less then the applicant is eligible for Chapter 7 bankruptcy. If the result lies within 6,000 to 10,000 then an applicant can be eligible for chapter 7 only if 25% of his debts are unsecured. The applicant will fall under the chapter 13 criteria if more than 25 % of the debt is unsecured. In case the result is more than 10,000 then the applicant will be eligible for chapter 13 Bankruptcy. Under all conitions the consumer has to submit a debt repayment plan to the court for approval.
An important eligibility criteria states that the applicant should not have filed for a chapter 7 bankruptcy in the past 10 years or a chapter 13 bankruptcy in the past 6 years period which has covered less than 70 % of the consumer's unsecured debt.
Bankruptcy is a complicated procedure will lots of calculation and documents involved. You must take assistance of a legal expert to deal with all the bankruptcy related issues. The legal expert will be able to analyse your finances and determine if you need to go for bankruptcy of some other debt relief program can be of help.
