There is a title for each person who takes part in bankruptcy. If you are the individual who filed the bankruptcy, your title is the “debtor.” In order to become a debtor, you have to apply and qualify. The qualification process reveals which type of bankruptcy you are eligible to apply for.
Bankruptcy Code Debtor Prerequisites
An individual (or couple) must fulfill one of the following prerequisites in order to become a debtor:
Live in the U.S.;
Own a home in the U.S.;
Own a place of business in the U.S.; or
Own property in the U.S.
The individual (or couple) must also complete a credit counseling course.
Factors That Preclude Debtors From Filing Bankruptcy
We have had clients who, even after qualifying to become a debtor, have found out that they were precluded from filing a bankruptcy case. Some of these clients had to wait 180 days to file their bankruptcies, while others had to wait longer. Typically, the preclusions are because the client filed a prior bankruptcy case or multiple bankruptcy cases in the past.
Bankruptcy Code can punish filers for specific behaviors relating to their past bankruptcies. The following reasons can exclude you from filing bankruptcy again:
The prior bankruptcy case was dismissed due to the debtor’s failure to follow court orders.
If the debtor requested the prior bankruptcy case to be dismissed because a creditor filed a motion for relief from the automatic stay.
Specific Bankruptcy Chapter Requirements
The type of bankruptcy (i.e. Chapter 7 or Chapter 13) you are filing will also have its own criteria for eligibility. In order to become a debtor under Chapter 7 or Chapter 13, you will be required to fulfill the corresponding eligibility guidelines.
Chapter 7 Requirements
To become a debtor for Chapter 7, you must:
Pass the Means Test
Pass the “Totality of Circumstances” and “Good Faith” tests
Essentially, the above tests were created to prevent debtors from misusing the bankruptcy system.
If you do not qualify for Chapter 7, you can still try to qualify for Chapter 13 bankruptcy.
To become a debtor for Chapter 13:
You must maintain a regular source of income.
You cannot have more than $419,275 of noncontingent, liquidated unsecured debts on the day you file your bankruptcy.
You cannot have more than $1,257,850 in noncontingent, liquidated secured debts on the day that you file your bankruptcy.
Obviously, there is a lot more to Chapter 7 and Chapter 13 bankruptcy than the information that we have discussed above. If you have any questions regarding either chapter of bankruptcy, you should reach out to an experienced bankruptcy lawyer to find out how you can get your debt under control.
Are You Considering Filing For Bankruptcy?
If you feel bankruptcy is the best option for your financial situation you need to speak with an experienced bankruptcy lawyer as soon as possible. Please contact us online or call our office directly at 888.348.2616 to schedule your free consultation.