There are two types of consumer bankruptcies, Chapter 7 and 13. Chapter 7 bankruptcy is probably that which is used most frequently, it requires that certain assets of the bankrupt be sold; the residual is then used to pay the creditors, either in full or in part. If only partial payment can be made, the debts are discharged regardless. There are tests to determine who is and who is not eligible for Chapter 7, your bankruptcy attorney Santa Ana can explain them in detail, but basically the tests are:
You will be subjected to a means test:
Every state has a median income for any given size of family. The test that you undergo compares your monthly income against the median. If your income is greater than the median, considering your family, then you may not be in a position to file Chapter 7 bankruptcy.
The means test is applicable if half or more of your debt is consumer debt, not business related, tax debt or tort debt. Tort debt is that judgment against you for causing damage or injury to someone else by negligence on your part.
Individual, married or small business owner:
Chapter 7 consumer bankruptcy does not apply to a corporation, partnership or LLC. In this case, the business must file for chapter 7 business bankruptcy which is different than consumer.
Chapter 7 consumer bankruptcy can be filed if:
* An individual
* Married and filing joint taxes with your spouse
* Sole proprietor with personal liability on business debt
* Half of a partnership where you will incur personal liability on a business debt, the partner cannot be your spouse
Recent discharge of bankruptcy:
You cannot make application for Chapter 7 if you filed for it in the past eight years. You can also not apply for Chapter 13 if you filed for in the past six years. The date of filing is what is used in making the calculation, not the date of discharge.
Recent bankruptcy dismissal:
Your bankruptcy attorney in Santa Ana will not be able to file on your behalf if you had a bankruptcy petition dismissed with 180 calendar days. The reasons for dismissal must be that you were in violation of a court order, your were found to be abusing bankruptcy, made a fraudulent filing or requested the dismissal because the creditor made a request for the stay to be lifted.
Credit counseling:
To file for Chapter 7 or 13 bankruptcies, federal law demands that you receive credit counseling. The counselor must be an agency approved by the federal government. The demand for credit counseling is not immediate but it must be sought and completed within 180 days of your debt discharge. The counseling includes financial management.
