Navigating Personal Bankruptcy


Understanding the different types of personal bankruptcy will help you understand which direction you should take to getting your finances back on track. Types of bankruptcy are dependent on the situation and are usually organized into "Chapters" to better aid the debtor in making decisions. The three most common types of personal bankruptcy are Chapter 7, Chapter 11, and Chapter 13.

Chapter 7 bankruptcy

Chapter 7 bankruptcy is a sort of fresh start when it comes to your finances. All of your assets (sellable stuff) are liquidated (turned into money) to pay off your debts. Whatever's left over is yours, so use it wisely.

Chapter 11 bankruptcy

Chapter 11 bankruptcy is typically used by corporations. However, individuals in a partnership may also apply for Chapter 11 bankruptcy in the event that your personal assets can be liquidated to extinguish the debt. However, if you happen to be the sole proprietor of the business, you're in a heap of trouble. Nothing is sacred if you're the sole proprietor filing under Chapter 11.

Chapter 13 bankruptcy

Chapter 13 bankruptcy is for people who are more or less able to pay some or most of their debts over a period of three to five years. This requires not only a stable income, but a disposable income as well. Chapter 13 debtors have been in it for the long haul, often carrying a mortgage or student loans on their conscience. 

What is a means test?

The type of personal bankruptcy you file for is determined by a means test, which is determined by the median income in your state. Not everyone is eligible for Chapter 7 bankruptcy, just like not everyone is eligible for Chapter 13 bankruptcy. In order to determine your eligibility, you'll have to fill out Official Bankruptcy Form 22A or 22C. 22A will help you decide if Chapter 7 is right for you, and 22C will do the same for Chapter 13. Both of these forms can be found on the US Courts website. These forms will look at your financials and have you do calculations based on your answers to the questions. For both forms you will need your personal financial records, as well as data from the IRS, which is also available on the US Courts website. If you need help filling out either form, your personal bankruptcy lawyer, one like Richard S. Ross - Bankruptcy Attorney, or a representative from your local bankruptcy court or state Bar Association can help you.


20 March 2015

Getting Through Bankruptcy With Minimal Stress

Filing for bankruptcy has a tendency to make people feel ashamed and stressed out, and can turn into a big source of depression if not handled properly. As a counselor for couples and families, I have worked with various families throughout the years who have had to go through bankruptcy. And during this time, I have seen firsthand how, with the right mindset, going through bankruptcy can make people stronger in their financial lives and careers. I started this blog to provide information about the right things to do and the things that should be avoided while going through bankruptcy to minimize stress and maximize potential once the process is over. If you have any questions or concerns, hopefully they can be addressed on these pages.