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If you have a large and unmanageable amount of debt, chances are the thought of bankruptcy has popped into your mind. It is normal to avert your thoughts from bankruptcy and try to find other solutions but sometimes, it is inevitably the best choice. If you have come to the point where you decided that debt settlement, debt consolidation, or extremely long-term payment plans are for you, you are probably wondering how bankruptcy works and whether you are eligible to file.
A common misconception about bankruptcy is that there is a minimum amount of debt an individual must have before he or she will qualify. This is not true. Generally, we tell people that if they have $10,000 or more of debt that they cannot pay, it may be prudent to explore the option of bankruptcy. But this is not a blanket minimum debt requirement. Although it is uncommon, a person with $8,000 may be better off filing bankruptcy than trying to pay the balance. This would likely only apply to either a very young or elderly individual who has little income, cannot afford payments sufficient to decrease the principal balance, and would be unable to survive if their income was garnished.
More often than not however, if a person comes to our office, it is with more than $10,000 of debt. The first question we ask to determine whether you qualify is whether you have filed a bankruptcy in the past. If you have, we need to know what chapter you filed under, the date it was filed, and whether and when it was dismissed or discharged and closed. There are strict limitations on how often an individual may file bankruptcy. If you previously filed a Chapter 7, you must wait 8 years to file another Chapter 7 and 4 years to file a Chapter 13. If you previously filed a Chapter 13, you must wait 6 years to file a Chapter 7 and 2 years to file another Chapter 13. This summary of the time limitations is general and it is important that you discuss any previous bankruptcy filings with an attorney before deciding whether to file again.
The next information we need that is crucial to this determination is your income and asset information. It is very rare that someone has too much income or assets to file bankruptcy at all. Nonetheless, this information dictates what chapter of the Bankruptcy code an individual should file under. You also need to be current on your federal and state tax filings to file for bankruptcy. At Martelle & Associates, P.A., we have an in-house accountant responsible for preparing taxes for our tax and bankruptcy clients. As long as we know the status of your tax filings, we can always take care of it.
Generally, if you have over $10,000 in debt and have not filed bankruptcy or filed long enough ago to surpass the time limitations, you will qualify to file. This does not necessarily mean that filing bankruptcy will be in your best interest. When we meet with a prospective client, we will objectively analyze all information provided to us to make a fair and accurate determination as to whether bankruptcy is the best option. Click here or call (208) 938-8500 for a no-obligation consultation!
When a troubled business is badly in debt and unable to service that debt or pay its creditors, it may file (or be forced by its creditors to file) for bankruptcy in a federal court under Chapter 7. A Chapter 7 filing means that the business ceases operations unless continued by the Chapter 7 Trustee.
Strict limitations on how often an individual may file bankruptcy. If you previously filed a Chapter 7, you must wait 8 years to file another Chapter 7 and 4 years to file a Chapter 13. If you previously filed a Chapter 13, you must wait 6 years to file a Chapter 7 and 2 years to file another Chapter 13. This summary of the time limitations is general and it is important that you discuss any previous bankruptcy filings with an attorney before deciding whether to file again.