The Bankruptcy Abuse Prevention and Consumer Protection Act (April 2005) made it more difficult for consumers to simply fill out a bankruptcy form and walk away from their debts through a Chapter 7 filing. For instance, people who make more than the state median income will need to pass a means test based on their living expenses, income and other factors. They may be then asked to fill out Chapter 13 application forms instead, which requires them to pay back at least some of their debt over a 3-5 year period.
Most people acquire a bankruptcy form through an attorney. Usually, you can get a free evaluation meeting to determine your eligibility for the various chapters of it and see if there are any alternatives to your situation. Before meeting to discuss court bankruptcy forms, you should assemble a full list of all your outstanding debts, including medical bills, credit cards, personal loans, auto loans and mortgage loans, along with the account numbers, the amounts owed, the minimum monthly payments and the number of months you are behind.
If the lawyer decides you are eligible to file some kind of bankruptcy form, then you will need to look at the Chapter 7 and Chapter 13 document forms. As a means test, the lawyer will look at your monthly income, your number of dependents and your monthly expenses. These figures will be compared to the median income value provided by your state.
If your income is equal to or less than the median, then you will be eligible for Chapter 7 bankruptcy, which allows you to walk away from your debts. If your income exceeds the median value, you must file for Chapter 13 bankruptcy, which lets you pay a reduced portion of your debt over a three to five year period.
Once you fill out your bankruptcy form, your creditors will either accept or reject your petition. Of course, it's not really their say whether you're eligible for filing or not, but they can certainly object if they feel you're hiding funds, that you applied for credit under false pretenses or that you recklessly used credit with the knowledge you would never be able to pay for the items purchased.
Legal professionals may block your bankruptcy filing as well, if you fail to show up to the two mandatory debt management counseling sessions before and after your declaration. It's important that you follow the rules and understand that it requires more than just the filing of a few court forms.
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