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How do I qualify for bankruptcy?

There are a number of myths surrounding bankruptcy and how it is completed. One of the biggest myths is based on who can qualify for bankruptcy, whether that is Chapter 7 or Chapter 13. Because there are misunderstandings, people who legitimately need help through a bankruptcy filing may not get what they actually require. Instead they are left struggling, thinking that there is nothing they can do to better their situation. In many cases, that simply is not true.

It May Be Easier Than You Think

In reality, it is not that difficult to qualify for bankruptcy. There are requirements that have to be met, and these are not subjective. In other words, it is not up to an opinion, but up to the facts. If you meet the legal requirements for the type of bankruptcy you want to file, then you can file and go through a bankruptcy proceeding, thus getting a fresh start and the potential for a brighter financial future.

Chapter 7 And The Means Test

To qualify for Chapter 7, which is where you are not obligated to repay your creditors at all, you must pass the means test. This test looks at your income, and compares it to the median income for your state and family size. If your income is higher than the median, you may not be approved. This test is a requirement if over 50% of your debt is consumer, and not tax, tort, or business debt. You will also be required to complete credit counseling, and you cannot have filed bankruptcy in the past seven years.

Is Chapter 13 The Right Answer?

For people who make too much money to go through a Chapter 7 bankruptcy, there is Chapter 13. This allows you to restructure your debts, so you can get them repaid in a way that works for your income level. The plan has to be approved by the court, and you will be paying back some - or maybe even all - of your debt, depending on your circumstances. This repayment generally takes between three and five years. You must be an individual, not a corporation, and you will have to go through credit counseling. You cannot have had a recent bankruptcy, and your debt must be under the current approved amount.

Other Options For Debt Relief

Because bankruptcy laws can change, it is important that you talk to an attorney before you make a decision. That way you can receive legal guidance, and find out what to do if you do not qualify for bankruptcy. There may be other ways to reduce your debt, such as calling your creditors, asking for reduced interest rates, and using consolidation loans. Options exist, and an attorney can help you find the one that is right for you.

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Dunlap & Seeger, P.A.
30 3rd Street SE
Rochester, MN 55904

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Phone: 507-316-0628
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