Individuals who are facing financial hardship often consider bankruptcy as a way to resolve their economic challenges. Bankruptcy immediately halts collection efforts and can lead to the discharge of certain debts if someone successfully completes the process.
There are different types of bankruptcy for people and businesses, and aspiring filers need to choose the chapter or type of bankruptcy that would work best given their circumstances. There are rules and limits for bankruptcy that may ultimately determine who qualifies and who does not. For example, Chapter 13 bankruptcy allows someone to set up a payment plan with unsecured creditors and to potentially discharge a good portion of what they owe.
There are no income limitations for a Chapter 13 filing
Chapter 7 bankruptcy is a form of bankruptcy that people may have a hard time accessing. It is subject to very strict rules regarding the maximum income of the person filing. They will need to compare their income over the last six months to the state median income for their household size. The same standard does not apply for a Chapter 13 bankruptcy.
Even those who enjoy competitive income levels can qualify. Additionally, they can potentially discharge more types of debt than they could in a Chapter 7 filing. Chapter 13 bankruptcy can help people discharge debts related to intentional injury to property, debts that someone took on to pay for taxes they owed and debts related to divorce or legal separation in addition to the standard unsecured debts people discharge in a Chapter 7 bankruptcy, like credit card balances and medical debt.
The one limitation that does apply to a Chapter 13 filing is a limit on the total debt that someone can discharge. As of the last adjustment made in 2022, the maximum amount of debt that someone can resolve in a Chapter 13 filing will be $2,750,000. Chapter 13 bankruptcy can often be the best option for those with a decent income and with assets that could potentially be at risk of liquidation if they were to file a Chapter 7 bankruptcy.
Seek Guidance From A Bankruptcy Lawyer
People of all income levels can qualify for this opportunity, even those who earn far more than the average household of the same size. Seeking legal guidance can help an aspiring filer to better assess whether this opportunity may be a good fit for their circumstances.