Can You Choose the Type Of Bankruptcy Filling
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Can You Choose the Type of Bankruptcy Filing?
Summary
While you can select the type of bankruptcy to file, eligibility depends on meeting specific criteria. This guide explores different types of bankruptcy and their eligibility requirements.Understanding Bankruptcy Options
When considering bankruptcy, it's crucial to understand that while you can choose the type to file, eligibility can be restrictive. Most people opt for Chapter 7 due to its speed and simplicity, but not everyone may qualify. Other options include Chapter 12 and Chapter 13.
Bankruptcy Options Explained
Chapter 12 Bankruptcy
Designed for "family farmers" or "family fishermen" with regular annual income, Chapter 12 is streamlined and less costly than Chapter 11, which is for large corporate reorganizations. It's beneficial for those with seasonal income, as it allows flexibility. Filing under Chapter 12 is voluntary, and only the debtor can initiate it.
Chapter 7 Bankruptcy
Chapter 7 is a popular choice for many because it requires no repayments over time and is relatively inexpensive to file. However, eligibility is determined by two key tests:
1. Median Income Test: Your average income must not exceed your state's median income. You can find this information on the Department of Justice website.
2. Means Test: If you don't pass the median income test, you may still qualify through the means test. Calculate your average monthly income and subtract allowed expenses and necessary debt payments. If the remaining monthly disposable income is less than $100, you can file for Chapter 7.
Chapter 13 Bankruptcy
If you don't qualify for Chapter 7 or are filing bankruptcy for the second time, Chapter 13 may be your option. Known as a wage earner's plan, it allows you to repay at least some unsecured debts over a five-year period without interest. Unlike Chapter 7, which requires liquidation of assets, Chapter 13 lets you keep your home as long as you comply with the payment plan terms.
In Summary
If bankruptcy seems to be your last resort for debt relief, you have the option to choose a filing type. However, eligibility is dependent on meeting specific criteria. It's advisable to consult with a bankruptcy attorney to determine which type of bankruptcy you qualify for.
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