Bankruptcy And Bankruptcy Requirements
Before rushing into filing for bankruptcy, you need to look at your overall debt situation and see if filing bankruptcy is your best option. If you are unemployed and have tons of debts and are being harassed by debt collectors by mail and phone calls, the first thing that you will probably think of is to file bankruptcy. Bankruptcy is definitely an option but you may have alternatives to bankruptcy, especially if you are unemployed. There are two types of Bankruptcy: Chapter 7 Bankruptcy and Chapter 13 Bankruptcy. Chapter 13 Bankruptcy Requirements require the petitioner to be employed.
Chapter 13 Bankruptcy Requirements: Protecting Your Home And Assets
A creditor can sue you by filing suit in court to collect their uncollected debt. Depending on your creditor, an aggressive bill collector or creditor will try to get a judgment against you. With a judgment, a judgment creditor can try to enforce the judgment they have against you by garnishing your wages, seizing your bank accounts, or placing liens on your property and/or assets. A judgment creditor though cannot seize your assets if they are exempt assets. Exempt assets are possessions such as your home, automobile, and basic necessities. There is a cap on wage garnishments also, depending on the state. If you have a family and are only making minimum wage or barely to pay your monthly bills, the chances are that the judgment creditor cannot garnish your wages. A judgment creditor will not go after folks who do not have assets or make little money. To enforce a judgment is extremely time consuming and expensive so judgment creditors will only go after debtors who have assets and income. A judgment creditor can only try to seize nonexempt property. Unemployment income, social security income, child support income, and pension income are all exempt income and a judgment creditor cannot seize it.
Chapter 7 Bankruptcy Requirements: Total Liquidation
If you have little or no income and very little or no assets, a Chapter 7 Bankruptcy might be your best option. If you own your home with little or no equity and a vehicle, you can still file Chapter 7 Bankruptcy and still keep your home and car if you can afford it and keep it out of your bankruptcy. A Chapter 7 Bankruptcy is total liquidation where if you own assets other than your home or car those assets will be liquidated to pay off your creditors. Chapter 7 Bankruptcy will wipe out all unsecured debts including unsatisfied judgments. However, government loans, student loans, child support, tax liens, and government fines are not dischargeable in a Chapter 7 bankruptcy.
Chapter 13 Bankruptcy Requirements: Restructuring Of Debts And Reorganization
If you have a good job and nonexempt assets that you want to protect and are afraid of the judgment creditors or bill collectors garnishing your wages, seizing your bank accounts, or placing liens on your properties and other assets, a Chapter 13 Bankruptcy might be the best solution for you. You need to consult a bankruptcy attorney or several bankruptcy attorneys for a free consultation to see what is the best option for you. A Chapter 13 Bankruptcy trustee will restructure your debts with an affordable payment monthly payment plan. A percentage of your income will be allocated to pay your creditors for a period of 3 to 5 years. After repayment plan is up, the remaining balance of your debts are discharged and you get a fresh financial start in life.
Unemployed, Fixed Income: How Is Your Employment Outlook?
If you are unemployed or on fixed income and only have exempt assets and do not forsee a good employment outlook in the future, your creditors cannot come after you. You are considered judgment proof which means that a judgment creditor cannot come after assets you do not have. As mentioned earlier, fixed income such as unemployment income, social security income, disability income, child support income, alimony, and basic income for your to pay your monthly bills are considered exempt in most states and a creditor or judgment creditor cannot go after wage garnishment. You are allowed to have a certain amount in your bank account and those assets are protected as well.