Qualifying for a Chapter 7 or 13 Bankruptcy

You qualify for filing a Chapter 7 bankruptcy if your monthly expenses equals or exceeds your income with nothing left to repay creditors in a Chapter 13 bankruptcy.  Our Louisville Kentucky Bankruptcy Court, often approves Chapter 13 bankruptcy plans that repay  10%, or less, of what you owe. 

There may be several reasons for filing a Chapter 13 bankruptcy instead of a Chapter 7.  First a Chapter 13 will allow you cure the arrearage on your home and stop a foreclosure.  Filing a Chapter 7 or answering a foreclosure complaint will only temporarily delay foreclosures about 6 months.  Together answering a foreclosure and filing a Chapter 7 will normally  delay the process for at least a year. 

A Chapter 13 may later be dismissed or converted if it does not work out.  You can repay alimony, taxes, and child support in a Chapter 13 at the expense of creditors.   You can strip away a second mortgage in a Chapter 13 if there is no equity for the second mortgage.   A Chapter 13 will discharge more types of debts.  You can stretch out car or home mortgage payments. And most importantly the US Trustee can't challenge a case which was filed as a Chapter 13.       

Click on this link to download an excel spread sheet to prepare your Chapter 13 or 7 budget.   Remember that you are allowed 401k contributions, charitable expenses and private school expenses if you have a history to show these past expenses.  You may have to document large medical or other expenses that are unusually high but you may take them. 

If a debtor files a Chapter 13 bankruptcy that repays 70%, the debtor gets the presumption of good-faith.  Chapter 13's are more affordable have greater benefits, and cost less than debt counseling, but require you to pay whatever disposable income you have into the plan.

If you cannot afford any partial repayment, have no assets to give to the court and all of your property is exempt, filing a Chapter 7 bankruptcy may be a better option than filing a Chapter 13 bankruptcy.  In a Chapter 7 bankruptcy, you normally repay nothing and you probably have nothing to lose. 

Listing your Expenses on this form should help you to decide if a Chapter 7 bankruptcy filing is right for you.    To save time, prepare your bankruptcy online.

The Bankruptcy Manual fully discusses how to qualify for a Chapter 7 or 13.  Download your free copy.

Louisville Bankruptcy  Kentucky Chapter 7 13  

Indiana Bankruptcy    Louisville Chapter 7 13

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