- December 7, 2012
- Posted by: Richard Feinberg
- Category: Chapter 7 Bankruptcy
The decision to file for bankruptcy is big step towards financial independence. While it may not seem like a desirable option, it is designed to be of utmost value and benefit. For individuals and families experiencing financial hardship, there are two options that may be able to help you resolve your debt burdens.
The federal bankruptcy code outlines the general rules and guidelines for filing bankruptcy, but each state has some flexibility in how cases can proceed. Personal bankruptcy options are Chapter 7 or Chapter 13, both of which come with different eligibility criteria, benefits and risks. When choosing to file for bankruptcy in Tampa here is what you need to know:
Chapter 7 bankruptcy — is the most commonly sought form of bankruptcy. However, must pass a means test in order to qualify. The means test evaluates your income and debts against the median income level of the state. If your income is less than or equal to the median level of the state, you may then file for Chapter 7. If your income is greater than this level, you may seek Chapter 13 instead. While a Chapter 7 case be completed in a matter of months there are considerations as to how debts are managed, which could pose more liquidation risk to your nonessential assets.
Chapter 13 bankruptcy — is typically referred to as the “wage earners plan”. Since your income level must be higher than what is allowed in a Chapter 7, Chapter 13 bankruptcy does require more payment of your debts. However, what is paid is based on your income, debts and assets; all of which are used to calculate a payment you can afford to pay. Chapter 13 cases can take three to five years to complete, but better protect all of your assets from liquidation and even give your future credit a brighter start.