If you are struggling with your debt, you can seek relief through bankruptcy. But first, you must file for bankruptcy and have the court approve your petition. Before you can do this, you must receive credit counseling. No more than 180 days may elapse between receiving credit counseling and filing for bankruptcy.
Each bankruptcy chapter has specific rules about which cases qualify and what the filer must do to finish the process. Each also has a filing fee, which may be repaid in installments in cases of financial hardship. If a petition does not meet the court’s requirements, the court may reject it.
Filing for Chapter 7 Bankruptcy
The fee for filing for Chapter 7 bankruptcy is $335. In order to file for Chapter 7 bankruptcy, you must pass the “means test.” To pass, you must earn less than your state’s median annual salary or demonstrate that after paying your required expenses, like your mortgage and car payments, your household does not have any “disposable income.” In Chapter 7 bankruptcy, your nonexempt assets are liquidated and the profits are used to repay your creditors.
Filing for Chapter 13 Bankruptcy
The filing fee for Chapter 13 bankruptcy is $310. To have a Chapter 13 bankruptcy claim approved, the filer must submit a repayment plan to the court that shows his or her ability to make the payments. In Chapter 13 bankruptcy, you work with your bankruptcy trustee to repay your debts through these structured payments.
Filing for Other Bankruptcy Chapters
Other bankruptcy chapters are available to individuals and companies struggling with debt. The chapters available to you depend on your circumstances. Aside from Chapters 7 and 13, which are for individuals struggling with personal debt, the following chapters are available:
- Chapter 11: Commercial enterprises that want to continue to operate but must reorganize in order to become profitable can file Chapter 11 bankruptcy.
- Chapter 12: Family farmers with regular income can file Chapter 12 bankruptcy, which operates similarly to Chapter 13. With Chapter 12 bankruptcy, the filer is assigned a bankruptcy trustee who oversees their three-to-five-year repayment plan.
- Chapter 9: Municipalities struggling with high debt levels can file Chapter 9 bankruptcy, which involves the development of a plan to handle the debts and recover financially.
- Chapter 15: This type of bankruptcy is used when an indebted individual has debts and assets in the United States as well as another nation. Insolvency cases that begin in other countries and come to the United States become Chapter 15 cases, which apply only to the assets and people in the United States.
Work with an Experienced Denver Bankruptcy Lawyer
If you are considering filing for bankruptcy, first speak with an experienced bankruptcy lawyer who can steer you in the right direction by providing you with appropriate legal advice. After speaking with a bankruptcy lawyer, you might find yourself considering a different chapter of bankruptcy or reconsidering bankruptcy altogether. Do not begin the bankruptcy process without first educating yourself about it.