Qualifications for Filing for Bankruptcy
In 2005, there were many changes made to bankruptcy qualifications. These laws greatly affect who is eligible for this form of debt relief. Before filing for bankruptcy, it is important that you learn which kinds of bankruptcy you qualify for, and which one is right for your financial situation. Generally, people speak with an attorney before making their decision.
Chapter 13
If you would like to file for Chapter 13 bankruptcy, you must be able to show that you currently have some source of income. United States residents qualify for Chapter 13 bankruptcy as do those who own property in the country. There are also debt limitations that govern eligibility for Chapter 13 bankruptcy. Unsecured debt, or debt that has no collateral, such as credit card debt, must be under $250,000. Secured debt is defined as debt with collateral, such as a mortgage. In order to file for Chapter 13 bankruptcy, you must be able to show that this amount of debt is under $750,000.
Chapter 7
Several different parties are eligible for filing for Chapter 7 bankruptcy. Businesses, individuals, and corporations may file for Chapter 7 if they are having trouble managing their debts. There is no limitation on debts in Chapter 7, as there is in Chapter 13. However, there are income restrictions, and people cannot make more than a certain amount of money and still qualify. Typically, those filing for Chapter 7 make less than the median income in their state or currently lack income altogether.
Chapter 11
The laws regarding Chapter 11 bankruptcy are complicated, making it essential to hire an attorney to see if you are eligible. Although Chapter 11 may be filed by individuals, it is normally filed by large corporations because of the amount of cash flow needed to qualify for Chapter 11 bankruptcy.
For More Information
If you are interested in finding out what type of bankruptcy you may qualify for, contact an Arizona bankruptcy attorney at the Harmon Law Office, LLC, at 480-829-0494 for a free consultation.