If you have been experiencing a financial crisis in recent months, you are definitely not alone in your struggle. Many individuals and business owners in Tennessee are currently facing similar situations. Like many of them, you might be contemplating various debt relief options, such as filing for bankruptcy.
Bankruptcy can be used as a valuable financial tool, not only to alleviate debt but to regain solvency, and, if needed, to start afresh with a brand new financial slate. To file a petition, you must first determine which program best fits your needs, as well as whether you are eligible for the option you choose. It’s possible to be qualified for one program but not another.
Taking a means test to determine income eligibility for bankruptcy
When you take a means test, your income from the past six months is reviewed. To be eligible for certain types of bankruptcy, such as Chapter 7, you must demonstrate that you do not have enough reliable income to make payments to satisfy your debts. In other words, income levels at or below a certain level would qualify for this type of debt relief.
If you have reliable income above a certain level that is enough to continue making payments to your lenders, you might not be eligible for Chapter 7 bankruptcy but may, instead, qualify for Chapter 13. Many people refer to this program as the ”wage earner’s debt relief” because it requires having a steady income to qualify.
Credit counseling may also be an eligibility requirement
To be eligible for bankruptcy programs in the United States, you must complete credit counseling before filing your petition. This is true, whether you are filing as an individual or as a business owner.
Secured and unsecured debt requirements
Secured debts typically include things like your home mortgage or a car loan. It is a debt that you incurred from a loan that you acquired by offering an asset as collateral. Unsecured debts, on the other hand, are debts like your credit cards, medical bills or other money you owe that are not protected by a guarantor or collateral.
To qualify for bankruptcy, you must meet the requirements for secured and unsecured debts. It is a good idea to inquire about these requirements so that you are fully aware of the dollar amount that is a cutoff point for each category. Your unsecured and secured debts must be below a specific amount to qualify for bankruptcy debt relief.