When considering filing for bankruptcy, there is often confusion as to which Chapter to file under Chapter 7 or Chapter 13. When you meet with your bankruptcy attorney, it is important to bring all financial documents to accurately calculate your yearly income and see which chapter you may qualify for. On May 1, 2014, the median income for individuals and families filing for Chapter 7 bankruptcy changed to the following:
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What this essentially means is that depending on your family size, you can make up to the following amounts in order to qualify for a Chapter 7 bankruptcy. It is important to remember that even if you are filing alone if you are married, your spouse’s income is calculated into these amounts. If you make more than the amounts listed, you may still file for bankruptcy but it is likely you will be filing under a Chapter 13 bankruptcy.
A Chapter 7 bankruptcy can often liquidate most, if not all of your debt. If you have assets that you are
reaffirming, those debts may not be eliminated (for more information on reaffirming debt see our previous post). A Chapter 7 bankruptcy case can last somewhere between 90-100 days from the time of filing your case. This means that in as little as 3 months, the whole process can be over and you can restart your financial life.
A Chapter 13 bankruptcy can take a little longer, usually between 3-5 years depending on the repayment plan agreed upon by you and the trustee assigned to your case. Within this time, your payments are sent to the trustee on a monthly basis and the trustee ensures that your creditors are paid on a timely basis. This type of case restructures your debt to help you pay a lump payment for all creditors instead of sending individual payments for each debt. For those who make above the median income for their family unit, this may be the best option to get back on track.
Both types of bankruptcy filings have their benefits and it is always recommended to meet with a bankruptcy attorney prior to filing to see which type will work best for you. A bankruptcy attorney can correctly review your personal case and help you make this process a smooth one. For a free consultation with our office, please call 305-820-0334 for a meeting in one of our offices conveniently located in Miami Dade or Broward County.