You don’t have to explain the circumstances that led to your bankruptcy filing, and you are generally able to file for bankruptcy if you meet the eligibility requirements and are not filing bankruptcy for a fraudulent reason. Some examples of bankruptcy fraud would include the following situations:
- You hide assets by failing to list them on your schedule of assets so that they will not be seized and distributed to creditors
- You give assets to a friend before filing for bankruptcy with the understanding that they will be returned to you at a later time
- You take on excessive credit card debt just before filing for bankruptcy because you think it will be discharged
The bankruptcy trustee will evaluate your case to determine if any fraudulent transfers occurred or if you otherwise lied on your bankruptcy forms. Do not omit any information or attempt to lie to the bankruptcy court, or you may be guilty of bankruptcy fraud.
Eligibility for a Bankruptcy Filing
To be eligible for a Chapter 7 filing, you must meet the following requirements:
- Your income is not above the state median income, or you pass the bankruptcy means test. If your income is above the median and you can’t pass the means test, you can still file by overcoming the presumption of abuse.
- The case is not an abuse of Chapter 7 for any other reason.
- You complete the mandatory credit counseling course.
- You otherwise make all filings and comply with all applicable bankruptcy procedures.
There are no limits on the amount of debt you can have, and it doesn’t matter whether you or solvent or insolvent.
For a Chapter 13 case, there are debt limits for both secured and unsecured debts. You will also need enough income to be able to get your bankruptcy plan approved, which will only happen if the court thinks you can realistically meet your payment obligations.
Reasons for Filing Bankruptcy
People filing bankruptcy for many different reasons, including:
- They lose their jobs and are unable to keep up with their expenses.
- They get sick and incur a large amount of medical debt.
- They begin using payday loans to pay rent or other expenses, and get stuck in a pattern of repeat borrowing that results is continually increasing debt.
- They can’t keep up with their mortgage, and want to save their home using a Chapter 13 filing.
If you are in financial distress and meet the other eligibility requirements, any non-fraudulent reason is sufficient for a bankruptcy filing.
Every person’s financial situation is different, and bankruptcy is a complex area of law. Contact the Law Office of Barbara B. Braziel to talk about your unique financial situation and how a bankruptcy could help you.
We are a debt relief agency. We help people file for bankruptcy relief under the U.S. Bankruptcy Code.