Bankruptcy Qualifications

Do I qualify for bankruptcy?

Federal bankruptcy law makes it possible for anyone to declare bankruptcy and enjoy the considerable benefits of being able to discharge debts, provided that they can meet certain financial qualifications. It is important to place restrictions on who can file for bankruptcy, so that unscrupulous individuals don't abuse the system by running up large sums in debt and then dumping the burden on their creditors. But if you have found yourself in a position of being unable to stay current on your loan payments, if your wages are being garnished to pay back taxes, or if your home has been threatened with foreclosure, you will likely qualify for some form of bankruptcy. An experienced attorney who can discuss your current situation with you to determine whether you can pursue this course of action, as well as guiding you through the often complex procedure.

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Before you can file for bankruptcy, you will have to live in your current state of residence for at least 2 years. When most people think of bankruptcy, they are thinking of Chapter 7, which allows the debtor to discharge nearly all debts. In order to qualify, you will have to pass a means test that compares your full burden of debt to your income and financial assets. Many people fail this test and lose the opportunity to file Chapter 7 because they miscalculate the relevant numbers, or fail to account for all debts. An alternative is to file for Chapter 13, which entails a restructuring of debts so that you can pay for 3 to 5 years in one single monthly payment, at the end of which period your remaining debt will be discharged.