Chapter of Bankruptcy
If you are facing overwhelming debt due to loss of job, divorce, medical emergency or a pay cut, you may need to obtain relief from filing a bankruptcy. In the last few years, bankruptcy has received a much-needed recognition Owing to overwhelming debts and out of control expenses or any untoward situation, filing a bankruptcy helps people to regain control of the financial condition.
When filing bankruptcy, remember, there are two types of bankruptcy; Chapter 7 and Chapter 13. It is important to know the difference between the two before you file the right bankruptcy:
Chapter 7 Bankruptcy:
This relates to the ‘debt liquidation bankruptcy’. In most of the cases, there is no need to liquidate anything. The filer keeps the belongings such as vehicle, clothing, furniture, cash or even jewelry.Since the filers are ‘no-asset filers’, they are not asked to give up their belongings or possessions.
- When Is It Appropriate?
Chapter 7 is suitable when a person is living beyond means, and (or) is overwhelmed by out of control debt. Moreover, an unemployed person can also get advantaged by this type of bankruptcy. The biggest benefit is that this is swift and simplest type of bankruptcy and takes 4 to 6 months from initiation to finish.
- Bankruptcy Means Test
In order to stand eligible for the Chapter 7 bankruptcy, you need to pass a bankruptcy means test. In this test, your median income for the household and median income of your state are compared. If the median income for a household is below than the income for your state, then you are eligible for this type of bankruptcy.
And if your income is much higher, and have a steady source of income then you are eligible for filing Chapter 13 bankruptcy. The main purpose of this test is to gauge that whether you can repay your debts or not.
Chapter 13 Bankruptcy:
A steady source of income for filing Chapter 13 bankruptcy means that you have a good paying job and (or) a pension. In this type of bankruptcy, your debts are rearranged and either you have to pay the full amount or a portion within three to five years. The purpose of restructuring the debts is to arrange repayment plans which you can easily afford. While issuing a new repayment structure, monthly income, expenses, and disposable income are considered.
Hiring a Bankruptcy Attorney:
There are very few skilled and qualified bankruptcy attorneys in Chicago; most of the attorneysclaim to handle your case skillfully. In order to hire the right Chicago bankruptcy attorney, visit his or her office to get an idea what the attorney is all about. After meeting, you will be able to gauge whether the attorney had sufficient answers to your questions or not; did that lawyer have complete information about bankruptcy be it written, video, published, or referrals? Did he or she appear efficient? Was the staff knowledgeable, humble and friendly?
If you have all of your questions answered satisfactorily, you can begin the proceedings with that lawyer. Moreover, you can also consult the American Bankruptcy Institute to find the bankruptcy attorney.