What to Do if You Do Not Qualify for Chapter 7 Bankruptcy
Many people start the bankruptcy process with the intention of filing Chapter 7. Chapter 7 bankruptcy does have many benefits. It is a faster option, allows you to discharge most or all of your debt, and you do not have to create a repayment plan. Unfortunately, not everyone is eligible for Chapter 7. If your income is too high, or you otherwise do not meet specific criteria, you may be denied for Chapter 7. However, that does not mean you are out of options. Below, our Florida bankruptcy attorney explains what these are.
Reasons You May Not Qualify for Chapter 7
There are many reasons you may not qualify for Chapter 7, but the most common is that your income is too high. To file Chapter 7, you will have to pass the ‘means test.’ The means test essentially determines if you have enough income to repay your debt. If so, you do not qualify for Chapter 7. Although high income is the main reason people do not qualify for Chapter 7, there are others, as well.
If you have filed Chapter 7 in the past eight years, you do not qualify for Chapter 7 bankruptcy. Additionally, if the court believes you are abusing the system, such as if you incurred significant debt just before you filed, your case may be denied.
Chapter 13 Bankruptcy May Be an Option
Many borrowers who do not qualify for Chapter 7 can still file Chapter 13. In Chapter 13 bankruptcy, you must create a repayment plan that allows you to pay your debt over a long period of time, usually three to five years. The amount of debt you will pay depends on your income and the amount you can afford to repay.
There are certain types of debts, such as child support and unpaid taxes, that you must pay in full. Others, though, may be discharged at the end of the repayment period even if you have not paid it in full.
Chapter 13 also has many benefits. You can protect property that may be sold during the Chapter 7 process to repay a portion of your debt. Additionally, the automatic stay is in place as soon as you file your bankruptcy petition with the court. The automatic stay stops creditors and lenders from contacting you to collect on debt. The automatic stay will remain in place until your bankruptcy case is closed, so you can stop all collection calls and other efforts, such as foreclosure.
Our Bankruptcy Attorney in Florida Can Help Determine Eligibility
If you are struggling with debt you cannot repay, bankruptcy might be the right option for you. At Florida Law Advisers, P.A., our Florida bankruptcy attorney can help you determine which type you are eligible for and guide you through the process so it is as easy as possible for you. Call us today at 1 (800) 990-7763 or chat with us online to schedule a case review and to learn more about how we can help.
Source:
uscourts.gov/court-programs/bankruptcy/bankruptcy-basics/chapter-13-bankruptcy-basics
