After exhausting all other means of regaining control of debt, many people begin to consider the possibility of filing for bankruptcy. What may come as a surprise is that not everyone can qualify for every type of personal bankruptcy. The best way to determine eligibility is to consult with a Chapter 7 Bankruptcy Lawyer.
Income Levels Versus Debt
While the laws that govern this particular form of bankruptcy vary somewhat from one jurisdiction to another, the income level of the individual will play a role in determining eligibility. People who earn less than the minimum annual income set in those bankruptcy laws will certainly be eligible for this type of protection. For people who earn more than that minimum, there is typically a specific formula used to determine eligibility. This is based on the amount of annual income versus the total debt owed. If the results of the evaluation determine that the debtor does not earn sufficient income to honor those debts, then filing for a Chapter 7 bankruptcy is feasible.
Nature of the Debt
Another factor to discuss with the and is the type of debt involved. Some forms of debt are not eligible for inclusion in this type of bankruptcy. For example, back taxes cannot be included in the action. The lawyer can look over the list of debtors and determine if all or only a part of the cumulative debt is eligible under current laws.
The Results of Filing a Chapter 7
Assuming that the debtor does meet all the necessary requirements, the lawyer with or will ensure that the client understand exactly what will take place. This includes talking with the client about working with a court appointed trustee, the type of hearings involved in the process, and even what to expect in terms of the impact of the bankruptcy on the ability to obtain credit in the future. While a Chapter 7 bankruptcy is the most practical solution for some people, it is important to consider all possible options before taking this serious step. By consulting with an attorney who can provide insight into the pros and cons of this action, it is much easier to make the right decision.
