How do I know which chapter of bankruptcy to file?

Bankruptcy is very complicated, and you should consult with an experienced and skilled bankruptcy attorney about your debt relief options.  People with primarily consumer (not business debts) can file bankruptcy under either Chapters 7, 11, or 13 of the bankruptcy code. You must elect one chapter to proceed under at the very beginning of your case when you file the petition with the court.  There are a few exceptions, but once you elect a chapter, you must stick with that chapter so it is very important that you know which chapter is best for you before you file.
Chapter 7 is for people who wish to give up their non-exempt assets in exchange for a discharge of most, if not all, of their debts.  You must qualify for chapter 7, however.  And to qualify, you must pass the “means test.”  The means test looks back at your monthly income (from whatever sources, e.g., job income, rental income, alimony, child support, etc.) for the last six months.  It will also consider your spouses income, if any, and how many dependents that you have.  If you make below a certain amount as determined by these factors, then you qualify for chapter 7.  If you made more than that amount, then you are required to file a Chapter 13 case.
Chapter 13 is for people who make a regular wage and either they make too much money to qualify for Chapter 7 (see means test above) and/or they would like to keep non-exempt assets that they would otherwise lose to liquidation in a Chapter 7 case.  In a Chapter 13, a person agrees to pay a portion of his or her disposable income to a trustee who then makes the payments to the person’s creditors.  The payment plan can be 3 to 5 years, but most of the time, it’s a 5-year plan.  One of the benefits to a Chapter 13 case is that the debtor gets to keep non-exempt assets.  For instance, if the debtor was involved in an auto accident case and is expecting a large settlement, but financial struggles have the debtor filing bankruptcy, then the debtor can keep the future settlement so long as the debtor elects Chapter 13 and makes all of his or her payments under the plan.
For more information about whether bankruptcy is right for you and what chapter you should file, schedule a free consultation TODAY with Savage, Combs & Villoch, PLLC.  Our telephone number is 813-200-0013.  We do bankruptcies in Central Florida and we’re ready to help today! Please visit our website to learn more about bankruptcy and refer a friend or family member too.

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