Appleton, Wisconsin, residents may be aware that when a person files for bankruptcy, the filing is either according to the provisions of Chapter 7 or Chapter 13 of the United States Bankruptcy Code. The eligibility criteria and the process for those two types of bankruptcy, however, differ to a certain extent. For example, when a person has a steady source of income and the outstanding debts are comparatively small, Chapter 13 bankruptcy may be the better option. Chapter 7 Bankruptcy is also known as Liquidation Bankruptcy.
In addition to small debts and a steady income, certain other factors also play an important role when it comes to a debtor’s eligibility for Chapter 13 Bankruptcy. One such example is the fact that Chapter 13 bankruptcy is only meant for individuals. That means that if there are unpaid business debts, the debtor will have to file for bankruptcy, either under Chapter 7 or Chapter 11.
A debtor may also find a Chapter 13 filing to be the better option if that debtor discharged debts in a prior filing under Chapter 13 within the last two years or under Chapter 7 within the last four years. Again, if a debtor has not had a bankruptcy filing dismissed in the past 180 days, either voluntarily or for a violation of a court order, filing for Chapter 13 bankruptcy remains the preferred debt relief solution.
In addition to meeting the basic eligibility criteria, if a debtor has completed credit counseling at least 180 days prior to the Chapter 13 filing, has the debt repayment plan ready, has filed income tax returns for the past four financial years and has a steady source of income, Chapter 13 Bankruptcy is the preferred option. A successful Chapter 13 filing will be able to discharge most of a person’s debts. The only debts that will remain are obligations such as child support, alimony and non-dischargeable taxes.
Many Appleton residents may feel that this is fairly simple. Nonetheless, the fact remains that bankruptcy filings are often complicated. Therefore, the debtor may find it beneficial if the person chooses to retain a bankruptcy attorney so that the debtor can understand all of the rules and regulations and also take advantage of the various bankruptcy exemptions that are offered, both at the state and at the federal levels.
Source: Bankruptcy.FindLaw.com, “Who Can File for Chapter 13 Bankruptcy?,” accessed on July 29, 2015