The latest Chapter 7 bankruptcy rules make it more difficult for some bankruptcy filers to file under Chapter 7. Liquidation under Chapter 7 bankruptcy is the most popular way to file for bankruptcy. Chapter 13 allows for a repayment of debts by the filer. The new bankruptcy rules state a few new requirements to file under Chapter 7:
- Must have lower than median income
- Must be unable to pay back debts
- Must complete credit counseling
The old bankruptcy rules allowed the filer to choose whether he wants to file under Chapter 7 or Chapter 13. Now, the filer must look at his income and must earn less than the median income for his household size in his state. If the income of the filer is less than the median income, the filer may file for Chapter 7 bankruptcy.
The Chapter 7 bankruptcy filer must also be unable to pay back his debts under a Chapter 13 repayment plan. The filer must look at his expenses and income, and the leftover amount must be under a certain amount depending on the state in which the filer lives. In addition, every person filing for bankruptcy under Chapter 7 or Chapter 13 must undergo credit counseling before the bankruptcy will be discharged.
Saving a Home
When an individual’s debts cause his home to be in foreclosure, a Chapter 13 bankruptcy filing can halt foreclosure proceedings. Under a Chapter 13 bankruptcy filing, a home foreclosure is immediately stopped and a payment plan is created under which the mortgage holder must repay the past-due amount over several years. Unlike filing under a Chapter 7 bankruptcy, the filer must make payments to creditors over time under Chapter 13. But under Chapter 13, the filer’s home is usually saved from foreclosure.
When an individual files for bankruptcy, he meets with a qualified Maryland and Washington DC bankruptcy attorney who leads him through the process of determining which type of bankruptcy should be used and represents him throughout the proceedings. An experienced Maryland and Washington DC bankruptcy lawyer can file all the appropriate paperwork with the U.S. Bankruptcy Court and can attend the bankruptcy hearing in front of the assigned trustee to represent the filer.
A qualified Maryland and Washington DC bankruptcy attorney works on behalf of the filer to file bankruptcy and to make sure the procedures run smoothly.