September 16th, 2009 by bankruptcy
In 2005, one of the biggest changes in the rules governing chapter 7 bankruptcy was regarding the income guidelines for filing chapter 7. However, the matter does not end there. There are two ways to get approved for chapter 7 bankruptcy.
Personal bankruptcy is legally covered by two chapters: 13 and 7. A few other chapters for bankruptcy are specifically meant for farmers and other special cases, but aren’t relevant for the average householder. Those people who seek to be totally free from debts file chapter 7 bankruptcy. However, there is a catch in this. The altered laws state that anyone with an income level that is over the state median for the size of your family cannot file for chapter 7.
However, there is another way you can qualify for bankruptcy under chapter 7 rules. This method is to file on the grounds of insolvency. The debtor needs to convince the court that his/her expenses (primary needs like food, shelter, etc) are greater than or at least equal to the monthly income. If you can prove this fact, the judge is empowered to overrule the first ruling and declare you insolvent and thus unable to complete chapter 13.
Adopting this method is not easy because the proof you give the court has to be convincing enough. The court will go through the proof with a fine toothcomb and overturn the earlier ruling only if it fulfills chapter 7 requirements. But if you are still unable to qualify for filing bankruptcy under chapter 7, you will have to do it under chapter 13. You can convert to the former at a later stage if you can prove that your financial situation has changed for the worse.
Hiring a good bankruptcy attorney is the best thing to do under these circumstances, since the paperwork involved in filing for bankruptcy can be quite mind-boggling.
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This entry was posted on Wednesday, September 16th, 2009 at 5:07 am and is filed under Business, Financial Planning, bankruptcy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.