Bankruptcy can be the only option for some individuals. It can help people get through tough financial times and make their future easier. When individuals need to go through bankruptcy, they may choose either Chapter 13 or Chapter 7 bankruptcy. Chapter 7 is best known for being the process that requires liquidation of someone’s assets. This can prove to be beneficial for some individuals as it will allow them to pay back their debts to the best of their ability. Chapter 13 bankruptcy is more known for its repayment plan. During this process, individuals can develop a repayment plan with their attorney to satisfy creditors.
What are the prerequisites for Chapter 7 bankruptcy?
Before applying for Chapter 7 bankruptcy, individuals should be sure to consider which bankruptcy option best fits their situation. They will need to ensure that they meet the requirements needed before filing for bankruptcy. Chapter 7 bankruptcy has certain requirements that people must complete before they are able to file for it. Individuals have to go through credit counseling and attend a debtor education course to prepare for this process. In addition to these requirements, they must pass a means test. This test is used to compare their income to the median income in the United States. In order to be eligible to claim their individual bankruptcy, their income has to be below the median income. However, there have been cases where they can be approved even if their income does not fulfill that standard.
How does the process continue?
Once the eligibility requirements have been met, a petition for bankruptcy must be filled out. You will have to claim a list of all your debts, an account of your income, monthly living expenses and a list of assets in this petition. The automatic stay will go into effect right after the paperwork is filed. This can immediately bar creditors from contacting debtors during this process. Creditors are no longer able to harass debtors for the money that is owed to them once the automatic stay goes into effect. This can be beneficial for debtors since they will not have to face the added stress of creditors contacting them. With this in mind, the automatic stay may even be able to prevent foreclosure. There are certain circumstances that can help these individuals.
Detzky, Hunter & DeFillippo, LLC is an experienced law firm that has proudly served clients across New Jersey for decades from their convenient locations in Freehold and Somerville. If you need strong legal guidance, contact us today to schedule a consultation. We are lawyers who listen, counselors who care.