Who Can File Bankruptcy?

In theory, any debtor is eligible to petition for bankruptcy. However, in practice and under bankruptcy laws, not all individuals actually qualify for bankruptcy relief or protection. Granted, a petition will offer limited, temporary protection to any debtor, but long term relief and assistance through an approved bankruptcy filing requires numerous other criteria to be met, aside from being unable to repay your debt.

Determining the Type of Bankruptcy Based on Your Income

In order to file, debtors must first be unable to repay your debt. This is both a personal and a legal decision. In cases of individuals with income levels deemed too high when compared with existing debt obligations, bankruptcy claims may be dismissed, or if filing for Chapter 7 discharge, be moved into Chapter 13 reorganization. Additionally, all debtors seeking bankruptcy relief must undergo pre-bankruptcy counseling. In pre-bankruptcy counseling with an accredited bankruptcy court agency, individuals will have their income assessed as well as debts, and a recommendation will be sent to the courts regarding their specific case.

Additionally, homeowners that have fallen behind on their mortgage payments will often use bankruptcy to stop foreclosure. The foreclosure process is automatically halted once a bankruptcy petition is filed, and often using chapter 13 can help homeowners keep their house while drastically reducing the payments and interest rate.

How to Obtain the Right to File Bankruptcy

Bankruptcy filings, in order to be approved, require the initial petition foremost. Second, all individuals must have their financial status reviewed by a pre-bankruptcy counseling agency, which assesses assets versus liabilities versus income levels. All of these factors, as well as numerous others, such as number of dependants and other expenses, all play into whether or not an individual debtor is deemed in need of Chapter 7 discharge or Chapter 13 reorganization and relief.

In essence, the right to file for bankruptcy is not guaranteed. In fact, under the latest legal developments regarding bankruptcy codes, it is more difficult than ever before. Rarely are pro se cases successful in bankruptcy courts, therefore, it is of paramount importance that debtors seek legal counsel before filing for bankruptcy.

Think Bankruptcy Might Be for You?