If you are considering bankruptcy, you may be wondering whether you qualify. You may have heard legal terms like “Chapter 7” and “Chapter 13,” and you may have heard that there are new qualifications under the bankruptcy laws that were passed in 2005.
At John T. Turco & Associates, in Omaha, we help Nebraska and Iowa clients understand their options and determine which type of bankruptcy they qualify for.
Understanding the Qualifications Under Each Chapter
There are two main types of bankruptcy for individual consumers under the United States bankruptcy laws, provided for in two different chapters of the Bankruptcy Code:
- Chapter 7 debt relief: This type of bankruptcy allows you to cancel your eligible debts without entering a payment plan. It may involve selling off some assets. Under the new bankruptcy laws, there is a means test; your income must be below a certain amount for you to file Chapter 7.
- Chapter 13 reorganization: This type of bankruptcy allows you to partially repay your debts over the course of three to five years. Some remaining debts may be discharged at the end of the process. To qualify for Chapter 13, you need enough regular income to participate in a payment plan.
While many people are concerned about whether they will qualify for bankruptcy, almost everyone who has debts they cannot afford to pay will be able to qualify under at least one chapter.
Weighing the Advantages of Different Types of Bankruptcy
Many people qualify for both major types of consumer bankruptcy. If this applies to you, then you will need to decide not only whether to file bankruptcy but also which type to file. Although it is sometimes possible to convert one type of bankruptcy to the other, it can be difficult.
Ask yourself why you are thinking about filing bankruptcy. Are you trying to avoid foreclosure? Are you trying to stop harassment by debt collectors? Are you in trouble with debt because of back taxes, divorce or troubles with your small business? In each case, one or the other type of bankruptcy may be more helpful.
Our experienced lawyers can help you sort out your options and determine which bankruptcy chapter offers you the best protections, given your individual goals.
We can help. Contact us to speak to one of our experienced bankruptcy lawyers or to arrange a free initial consultation. If you cannot come to our Omaha offices, we can consult with you by telephone.