Requirements for Bankruptcy
Requirements for bankruptcy
When people hear the word bankruptcy they get scared. It’s not a miracle, because bankruptcy is a cruel end for debt but also for credit report. Despite of its bad reputation, bankruptcy is used by people who have serious debt problems.
Bankruptcy can happen if you lose your job for example. The impossibility of paying the debts requires this solution. It’s true that using bankruptcy you can get out of debt, but you will not be able to take any kind of loans for a long time. There are two main kinds of bankruptcy. The first is chapter 13 bankruptcy. This type is used when you still are able to repay at least a part of our debt. The other one is chapter 7 bankruptcy. This is the method that makes you debt free instantly.
Getting out of debt so easy might sound very charming, but in reality it’s not. If you want to file bankruptcy you have to meet some requirements first. These requirements are taken in serious and they are strict.
The two kinds of bankruptcy have a bit different requirements, but mostly they are the same. First of all we have to mention your income. Income is very important. It’s clear that if you have enough money, you won’t need to think about bankruptcy at all. If you have some income, but it doesn’t cover you whole debt, than you have to use chapter 13 bankruptcy. This type requires at least a small income that you can offer to creditors. If you are broken down totally, you simply have to let all behind. For such a life-changing event is chapter 7 bankruptcy invented.
To use chapter 13 bankruptcy you have to be an individual as debtor. You have to generate some income that you can offer to your creditors. Also the monthly payments and debts can’t exceed a given sum. If you meet all this criteria, you will be eligible for a chapter 13 bankruptcy.
Chapter 7 bankruptcy requirements start also with income. Your monthly income is measured to a median income. If it is less, you can file bankruptcy. There are some other factors that have to be considered, but the main factor is the income.
Bankruptcy can bring you debt relief, but it’s not easy to get and also not rewarding. If you want to use it anyway, you have to get yourself in deep financial trouble.
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