An excerpt from Bankruptcy: A New Beginning by Seth Hanson
No, you do not have to be delinquent on your debts to qualify for bankruptcy.
The qualifications for filing bankruptcy are fairly straight forward. First of all, the bankruptcy must be filed in good faith. This issue does not come into play very often, particularly in my practice. Almost all of the people I consult with are good, honest people who are
simply struggling with their debt, due to sickness, job loss, under-employment, divorce or other family problems, or genuine struggles with budgeting. The rare instances the good faith requirement might be tested usually involve several bankruptcy filings close together, lying during the bankruptcy process, concealing assets, or taking out debt without the intent to repay it.
The vast majority of people I consult with have nothing to worry about. I believe I am a very good judge of character. If I have any reservations about representing a particular person, I show them the door. That’s one of the benefits of owning my own firm. I won’t file bankruptcy for someone who I don’t believe is trying to file bankruptcy in good faith.
Another basic qualification for a Chapter 7 bankruptcy is that your income be low enough that you cannot reasonably afford to repay any portion of your general unsecured debt. As you can imagine, there are specific tests to measure your income and the reasonableness of your expenses. But the general principle is that you can qualify for a Chapter 7 bankruptcy if you don’t have any disposable income.
To be eligible for a Chapter 13 bankruptcy, you need to have regular income and have secured and unsecured debts below Congressionally established thresholds.
For more information contact your Stockton bankruptcy attorney.
Categorized in: Debt