Catherine Christiansen is a bankruptcy attorney at the Christiansen Law Office. Located in Long Beach, California, she is an experienced instructor in the field, having taught courses for the Society of Tax Consultants for years. In this article, Christiansen advises us as to who can and who cannot file for bankruptcy.
Certain eligibility requirements are required to file for specific types of bankruptcies, but it can be nearly impossible to tell which of these requirements you do or do not meet without first meeting with a qualified attorney.
For example, individuals whose secured debts are over a certain limit are ineligible to file for a Chapter 13 bankruptcy. The same applies if their unsecured debts fall in an area over the recognized limit. So the amount of debt that a person has can determine whether he will qualify for certain bankruptcy types.
Income is another limiting factor, since people whose income is too high will not be eligible for a Chapter 7 bankruptcy. In those cases, these individuals with higher-than-average incomes are forced into filing for a Chapter 11 bankruptcy. Meanwhile, corporations are ineligible to file for a Chapter 13 bankruptcy, so that is yet another limiting factor.
All these limitations and restrictions can be complex and confusing to the average person. That is one reason why it is good to hire a bankruptcy attorney who is well-versed in the area of bankruptcy and tax laws, and who works in a specific division in the district, to handle your situation.
The laws are always changing, and certain exemptions are allowed for individuals who might not necessarily be apparent at first glance. But a good lawyer will be able to look at your individual situation and point those exemptions out, and find out whether you qualify for a bankruptcy type that you may not have realized you qualified for.
To determine these types of things, you have to get deep into the code section, and look to see what is allowable under the IRS rules. All the little nuances have to be checked out, and you have to make sure that someone really can qualify for a Chapter 7 filing before you start the process as an attorney.
I have debtors who come in frequently who say that they want to save their home. If they actually qualify for a Chapter 7, then we will work really hard right away to make sure that they can get their monthly mortgage payment in on time, and make sure that they start the process to cure any defaults that they might currently have.
Thankfully, there are many instances where all this work pays off and the debtor is able to keep his home. Of course, that is only when they are willing to go through a very lean three to five years — three years specifically if they are a Chapter 7 eligible individual.
Keeping your home after going into default often takes more than just filing a simple petition, though. In order to get something like that done, you have to ask the court for permission and get a motion on that action.
What I sometimes worry about with clients is that they will end up calling a debt consolidation company before checking out their bankruptcy options with a lawyer. This can be a real setback because a lot of times people end up paying a lot of money for those services without ever receiving the relief they need. Debt consolidation can be a remedy for some people, but oftentimes I see clients who tried it out and found out debt consolidation was not a good remedy for their situation.
A bankruptcy court has a lot more authority than just someone at a debt consolidation agency who is trying to negotiate with individual creditors, which is why that isn’t such a good option for many people who are hoping to keep their home and avoid a foreclosure sale.
Like I said before, there are many remedies that you can try when you are having trouble making your payments, and filing for bankruptcy is one of them. Even if you don’t think you will qualify for one certain type of filing, it is still worth making an appointment with a qualified bankruptcy attorney to find out what your other options might be.
This article is for informational purposes only. You should not rely on this article as a legal opinion on any specific facts or circumstances, and you should not act upon this information without seeking professional counsel. Publication of this article and your receipt of this article does not create an attorney-client relationship.
