Deep Listener Blog

Different Chapters when Filing Personal Bankruptcy

October 14th, 2009

There are 2 different types of personal bankruptcy, chapters 7 and 13. Most individuals file under chapters 7 and 13. With chapter 7, the filer should have few assets and mostly unsecured debt. To qualify, the bankruptcy filer takes a Means Test to determine whether the person filing personal bankruptcy has the right monthly income to qualify. This means that the family must have an average income that is equal to or less than the median income in his state. If a person has equity in a home or other property, he shouldn’t file for Chapter 7 because his assets may be liquidated to pay the creditors. Under Chapter 13, the filer can keep his property and files a plan to repay the debt over a period of several years; therefore, the assets are not sold to pay for the debt, as what often happens in chapter 7.

Entry Filed under: Business