Am I Eligible for Bankruptcy?
This question is tricky in its simplicity. While almost every individual person is eligible to file a bankruptcy, the real consideration is eligibility for bankruptcy relief, which can vary from person-to-person. Most frequently, the question is "can I file a chapter 7 straight bankruptcy and obtain a fresh start with a discharge?"
Fresh Start with a Chapter 7 Discharge
After Congress passed BAPCPA, the 2005 bankruptcy law, access to chapter 7 bankruptcy became more complex. However, a great many debtors remain fully able to file a chapter 7 bankruptcy and quickly obtain a discharge and the fresh start it provides. The means test introduced by BAPCPA requires a formulaic determination of whether a debtor, based on income and expense allowances, is "able" to pay some of his or her debts using a chapter 13 bankruptcy. If you are below the median gross income for a household of your size in North Carolina, no further means testing applies, and chapter 7 is as open to you as it ever was. On the other hand, if your income is above the median income, your expenses will have to be analyzed using the means test, a statutory formula. If this statutory formula shows sufficient income available to repay unsecured creditors, a presumption against chapter 7 eligibility will arise, and your case has a particular risk of being dismissed without discharge. In that event, your attorney will counsel you on options for continuing with chapter 7 or instead seeking chapter 13 relief.
Relief via a Chapter 13 Bankruptcy Plan
Even if one's finances are such that a chapter 7 bankruptcy is not a viable route to a financial fresh start, chapter 13 is usually available for a debtor. Chapter 13 requires a series of payment to the bankruptcy trustee, and may or may not involve paying off more of your debt than in a chapter 7 bankruptcy. You must have a source of income to be successful in a chapter 13 bankruptcy, although this income need not be great, only sufficient to pay whatever payments the case requires. The total amount of debt that you owe may make you ineligible for chapter 13 bankruptcy. These limits are fairly high, and few debtors in North Carolina have problems with these ceilings.
If you previously filed a bankruptcy case, this creates additional timing considerations to ensure enough time has elapsed for you to be presently eligible for a bankruptcy discharge in a newly filed case. In certain situations, recent prior bankruptcy cases ending in dismissal may impact the ability of a debtor to obtain an automatic stay that stops collection activity of creditors or might bar refiling altogether. We would be glad to discuss with you the particulars of your situation and find the most effective route for debt relief.