You have probably heard the saying, ?Live while you are young.? Unfortunately, many people feel as if that means that they can do anything you want, even if they cannot afford it. If you have been frivolous with your money, you probably are finding yourself knee deep in debt. You have enormous credit card bills and loans that you cannot pay, and your credit score is plummeting. If your debt is spiraling out of control with no end in sight, you might want to see if you are eligible for bankruptcy.
Chapter 7 bankruptcy allows you to eliminate your unsecured debt. Unsecured debts include credit cards, medical bills, personal loans and utility bills. Because Chapter 7 bankruptcy is becoming common, laws have been implemented to reduce the amount of bankruptcies filed. In order to file for bankruptcy, you must pass a ?means test.? This is a test that compares your income to the average income of the state. In order to pass the test, your income must be less than the median income of a family of the same size in your state. In order to determine your income, you take your average income over the last three months.
If the means test does not meet the qualifications to file for bankruptcy, you can still qualify if you do not have enough disposable income. Your disposable income is income that is left over after you have paid your monthly obligations. If your disposable income is over a specific amount, you will not pass the means test, so you cannot file for bankruptcy.
The calculations for the means test will differ according to where you live. You can use online calculators to determine if you will pass the means test. You will enter information about your expenses and income, and the calculator will determine if you pass. If you fail the test, you will need to file for Chapter 13 bankruptcy.
In addition, in order to file for bankruptcy, you must owe at least $1000, and you must be unable to make your monthly payments. You must also have inadequate non exempt assets that would not be able to pay your creditors if liquidated. Furthermore, you are not permitted to file for bankruptcy if you have been given a Chapter 7 discharge within 8 years of refilling.
Chapter 7 bankruptcy can be a difficult and time-consuming process. A bankruptcy attorney can help determine if bankruptcy is the right solution for you. He can assess your finances, and calculate the numbers. If you do qualify for bankruptcy, you will need the assistance of a bankruptcy attorney.
Your financial situation can get out of control before you know it. Therefore, bankruptcy might be the best way to start over with your money. Each state has different laws concerning bankruptcy, so you need to be familiar with the laws in your state. Research your options to see if bankruptcy might be right for you. You can then put your financial mistakes in the past and look forward to a brighter financial future.
About the author : Carly Lance is employed by Personal Bankruptcy Canada (www.personalbankruptcycanada.ca), a company of experts in the bankruptcy and insolvency act. She also thinks of herself as a personal finance junkie and loves to blog about saving money, frugal living and getting out of debt whenever she can. She believes a happy life = happy finances.
Source: http://www.ericfinance.com/eligible-for-bankruptcy/
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