For both Chapter 7 and Chapter 13 bankruptcy, individuals have the opportunity to get their finances in order and improve their situation. Both processes are better suited to help an individual in need of financial help, rather than a business. After the paperwork is filed for both bankruptcies, an automatic stay goes into effect. With this, individuals do not have to face harassment from creditors any longer. The automatic stay bars creditors from contacting debtors in an attempt to collect compensation. This tool helps individuals focus on their financial planning and avoid the stress of creditors.
Before individuals go through either bankruptcy process, they must complete the prerequisites. This is to ensure they are eligible to file.
What’s involved in Chapter 7 bankruptcy?
To qualify for Chapter 7 bankruptcy, individuals have to undergo credit counseling and attend a debtor education course to prepare. In addition, they must pass a means test, which compares their income to the median income in the United States. In order to be eligible to claim 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.
Once you have met the eligibility requirements, a petition for bankruptcy must be filled out. In this petition, you will have to claim a list of all your debts, an account of your income, monthly living expenses and a list of assets. When the paperwork is completed, the automatic stay goes into effect immediately.
How does Chapter 13 bankruptcy proceed?
Filing for Chapter 13 bankruptcy is very similar to the process that individuals go through for Chapter 7 bankruptcy. Eligibility requirements need to be met first. These requirements include credit counseling 180 days before filing for bankruptcy. If you previously filed a petition that was dismissed within that 180 days, you cannot file again.
Once you file for bankruptcy, you should include documents that outline a list of liabilities, assets and property, a statement of financial affairs, a list of executory contracts and unexpired leases, proof of credit counseling and any plan developed to handle the matter, income payments within 60 days prior to filing, monthly net income and any indication of a rise in income or expenditures and interests the debtor has in state or federally-qualified education or tuition accounts.
As with Chapter 7 bankruptcy, an automatic stay goes into effect for Chapter 13 bankruptcy as well. Once the paperwork is completed and filed, the automatic stay will go into effect immediately.
The Lauterbach Law Firm is proud to serve clients throughout Rockland County who are faced with legal matters related to estate planning, real estate, foreclosure defense, landlord-tenant law, business law, and criminal defense. If you require the services of an experienced team of attorneys, contact The Lauterbach Law Firm today to schedule a consultation.