Bankruptcy laws are complex, and although cases are heard in Federal court, our laws are comprised of state and federal statutes. There are similarities from one state to another, but some states’ rules are slightly different than others. There is more than one type of bankruptcy, which only adds to the confusion, and the type you choose depends on many factors. Below are some facts to consider before filing, and if your questions aren’t answered here, you should call Attorney Steven J. Schiffman.
Passing the “Means Test” Before Filing for Chapter 7
In 2005, Congress passed the BAPCPA (Bankruptcy Abuse Prevention and Consumer Protection Act) into law. The law established the ‘means test’ which gauges a debtor’s eligibility to file for liquidation or Chapter 7 bankruptcy.
The means test comes in two parts. In the first part, a formula determines whether the debtor can pay at least 25% of his or her unsecured debts. If so, the debtor cannot file for Chapter 7 bankruptcy. The second part of the test compares a debtor’s income to the state’s median. If the debtor’s income exceeds that number, he or she is barred from filing for Chapter 7, but a Bankruptcy Lawyer Harrisburg can recommend Chapter 13 as a viable choice.
Filing for Chapter 11 as an Individual
Chapter 11 is often regarded as business reorganization, but individuals can use it as well, similarly to Chapter 13. US bankruptcy laws set limits on Chapter 13 eligibility; if a debtor owes more than a certain amount, they are ineligible. If a debtor can’t file Chapter 13, Your bankruptcy lawyer in Harrisburg may suggest Chapter 11 as the next best choice because of its different statutory limitations.
Keeping your Assets During Chapter 13
Despite what you may have been told, you don’t have to sell off all of your assets in bankruptcy, and Chapter 13 lets you keep most of your assets. If a debtor files for Chapter 13, they’ll have to formulate a repayment plan. Those making payments on time and fully will be permitted to keep their assets, avoiding foreclosure and liquidation.
America’s bankruptcy laws are complex, but you don’t have to navigate the legal system alone. A Bankruptcy Lawyer Harrisburg can assess your financial situation, and recommend the bankruptcy solution that suits your needs.
