When considering bankruptcy, most clients want to know whether they qualify for a Chapter 7 bankruptcy. Chapter 7 Bankruptcy allows a consumer to eliminate all eligible unsecured debt. This means that they will no longer be obligated to pay their credit card bills, medical bills, personal loans, payday loans, past utility bills and other unsecured debts. Chapter 7 bankruptcies are not available for all clients so it is important to look to their specific circumstances in order to determine how they will be best advised.
In order to determine eligibility for a Chapter 7 bankruptcy, you must consider your assets and your income. You can protect certain assets from creditors by using the exemptions that are provided by state and federal law. If you own a home or car, you must determine the amount of equity that you have in those assets and see whether or not it exceeds the amount of the exemption. This means that you do not have to be penniless to be eligible for Chapter 7 but if the value of your assets are too high, you may have to file a Chapter 13, which is a structured repayment of debts.
In addition to income, you must also look at your income and family size. If your income is below the median income for your family size in your state, you are qualified to file for a Chapter 7. If it is higher than the median income, you may still be eligible for a Chapter 7 if you can show that your necessary expenses are high enough that at the end of each month, you are left with very little disposable income.
If you are interested in receiving assistance in determining which bankruptcy is best for you, feel free to call my office for a free consultation. I can be reached at 215-629-3800.