Am I Eligible to Declare Bankruptcy?

Posted on December 29, 2014

As the American economy has recently waned, a lot of undue financial stress has been placed on American families. Our national debt is only increasing, and the average amount owed per capita is rising as well. If you are feeling burdened by debt you may be asking yourself, “Do I qualify for bankruptcy?” The answer to this question is largely dependent on what type of bankruptcy you wish to file although additional factors come into play.

Chapter 7 Eligibility and the Means Test

The largest determiner of eligibility for Chapter 7 bankruptcy is called the means test. Essentially, the idea is to compare your household income to the median household income in your state. If it can be proven that your income is less than the state median income, you qualify for Chapter 7 bankruptcy. Some people may have the ability to pay their debts and instead try to find an easy way out by filing for bankruptcy. The means test was designed to weed out those who would try to take advantage of the system.

However, if your income is greater than the state median, a new determinant comes into play: your disposable income. Disposable income is what is left over after you pay your allowed monthly expenses to meet your basic needs. Unfortunately, if your disposable income is too high you will fail the means test and lack eligibility. Seeking a Chapter 7 bankruptcy lawyer will help you determine that you meet all of the requirements.

Chapter 13 Eligibility

There are several caveats and reasons why an individual cannot file for Chapter 13 bankruptcy. It also important to note that businesses are not eligible to file for Chapter 13 bankruptcy. Also understand that if your debts are higher than a certain fixed amount, you will also not be eligible. Currently your debts must not exceed $1,149,525 to qualify for eligibility, but the number changes over time to account for inflation. The debt cap for unsecured debt is adjusted as well, and currently they must not exceed $383,175.

Another critical requirement to be eligible for Chapter 13 bankruptcy is your income tax filings. You must be up to date and produce documentation that proves you have filed your income tax for the previous four years before you are eligible. If you aren’t sure if you meet all of the requirements or not, it is in your best interest to speak to an experienced bankruptcy lawyer.

Finding an Experienced Local Attorney

If you live in South Bend, Indiana and are considering bankruptcy proceedings, call the Law Offices of Jason R. Moseley. We have years of experience serving clients as a bankruptcy attorney in South Bend, Indiana. We specialize in bankruptcy law and have helped countless individuals through the Chapter 7 and Chapter 13 bankruptcy process. Call us at 574-707-8675 to reach our office in South Bend, Indiana or at 219-472-8391 to reach our Merrillville office to learn what bankruptcy options are the best for your unique situation.