If I don't qualify for Chapter 7 will I qualify for another bankruptcy?

Every debtor should understand that in order to participate in the Chapter 7 bankruptcy process, they must pass a means test to qualify. Chapter 7 bankruptcy currently employs a relatively complex method of determining who is eligible to file, and in certain cases, debtors may be refused the chance to file under Chapter 7. If this is the case, the next most likely option will be to file under Chapter 13 bankruptcy.

Chapter 13 bankruptcy entails similar protections under Bankruptcy Law as Chapter 7 (including automatic stay, protection from creditors during process, oversight from trustee, and other benefits), but unlike Chapter 7, Chapter 13 does not involve a discharge of debts per se. Rather, Chapter 13 involves establishing a repayment plan for your debts over the course of three (3) years, with the possibility of this time being extended to no more than five (5) years, while under the supervision of a bankruptcy trustee. Under the Chapter 13 process, debtors can renegotiate, workout, and repay outstanding debts over time, and in limited instances, may receive a hardship discharge at the end of the Chapter 13 process.

Unlike Chapter 7, Chapter 13 bankruptcy also does not involve liquidation of assets, which allows debtors to retain their possessions, assuming they stick with the requirements of the Chapter 13 plan and account for repayment of the secured assets. In reality, the determination of where your current debt situation fits into the bankruptcy process is one that can only be best decided by a bankruptcy lawyer, who has reviewed the case-specific elements of your debts, income, expenses, and other considerations.