Bankruptcy is a valid option for consumers with challenging debts. The process allows the consumer to settle their debts according to the chapter of choice. Chapter 13 bankruptcy provides a repayment plan, and chapter 7 offers settlement via liquidation.
How to Qualify for Bankruptcy
The first step is to present proof of income. The consumer provides documentation for all sources of income. They may provide tax returns or pay-stubs. The include sources will include wages, child support, alimony, and dividends from stocks or savings accounts. The total of these income sources determines if the consumer qualifies for bankruptcy.
According to federal laws applied to Chapter 13, the consumer must possess an income that is above the county’s median. The median income for Baltimore County is $50,667. If the consumer’s income is below this average, they don’t qualify for this chapter. They qualify for chapter 7. However, if they have an income greater than this average, they qualify for both chapters.
Fulfilling Federal Law Requirements
Federal laws require all consumers who wish to file for bankruptcy to attend a credit-counseling course. The program must be state approved. To fulfill this obligation, the consumer could acquire a list of state-approved programs from bankruptcy attorneys in Baltimore.
Creating a Repayment Plan
The total value of the consumer’s debts as well as all income sources are evaluated. In Chapter 13, the consumer’s repayment plan spans over a period of up to five years. As this plan is produced, the court determines the most appropriate monthly payment based on these probabilities. The final value reflects the portion of the consumer’s wages minus household expenses is used for these payments. Additionally, any disposable income left over after paying these expenses are used to pay any other debts.
Bankruptcy plans help consumers to achieve the dream of becoming debt free. The court identifies the most appropriate chapter based on the consumer’s income. The consumer must fulfill all obligations associated with the chosen chapter including remitting applicable fees when filing. To learn more about these chapters and their benefits, contact bankruptcy attorneys in Baltimore for additional information today.
