Personal Bankruptcy Laws & Rules

Debt is suffocating. You’re not alone in feeling as if you have no options when facing a mountain of unpaid bills and loans. It’s especially difficult to make ends meet in trying economic times. When aggressive creditors and scary collectors come calling to pursue the money they are owed, your specific personal situation isn’t taken into regard. In many cases, creditors file lawsuits, obtain judgments, and can even garnish your wages or your bank account.

You shouldn’t live in fear of your debt. You have options. Personal bankruptcy laws exist to help you save a great deal of potential loss. We want to help you understand bankruptcy rights. While declaring personal bankruptcy is a stressful process, it exists to help you figure out a new path and start with a fresh credit history. Trying to decide if this is the right path for you? Obtain a free case review and find out how we can help. 

What Can Declaring Personal Bankruptcy Do?                                                        

Wondering what declaring personal bankruptcy can do for you? Personal bankruptcy can:

  • Give you a fresh start by eliminating most or all of your debts
  • Force creditors and collectors to leave you alone
  • Stop any garnishments that are proceeding or about to begin
  • Place a stop on any lawsuits pending against you
  • Have all outstanding balances removed from your credit report. The fact that you filed for personal bankruptcy may appear on your credit file, but the creditors must report that the balance owed on the account is zero

While filing for personal bankruptcy is a way to manage your debt, it’s not a one-size-fits-all solution. However, if you face an insurmountable pile of medical bills, student loans, mortgage bills, it may be the right decision for you. Many of our clients have found success in this path. Read their success stories here. 

How to Decide if Filing for Personal Bankruptcy is for You

Not sure if personal bankruptcy is the best path? Try out the Chapter 7 bankruptcy means test. This is a good guideline to figure out if you should file for personal bankruptcy. It helps you figure out if your income is low enough to file for Chapter 7 bankruptcy and have all of your debts wiped clean. If you do not pass the means test, it means you are able to pay at least a portion of your debts and you should file for Chapter 13 bankruptcy instead.

The means test is comprised of several steps; it’s advisable to have an experienced attorney assist you in the process. In short, the Chapter 7 means test involves finding out if your current monthly income falls above or below your state’s current monthly income median. Each state has a different metric; if your CMI falls below the median you can file for Chapter 7 bankruptcy without going through the rest of the means test. However, if your income is above your state’s median CMI, you typically must proceed with the rest of the means test.

Then find out your disposable income. Your disposable income is your current monthly income minus allowable expenses, like taxes, rent, car payments, and so on. If your disposable income falls under a certain number, you can go ahead and file under Chapter 7. If it’s higher than a certain amount, you must file under Chapter 13 bankruptcy. However, it’s not always this simple. If your disposable income falls between two set amounts, it gets a little trickier. If your disposable income for the next 60 months is high enough to pay at least 25% of your debts, you do not qualify for Chapter 7.  Note that these amounts are subject to differ between states. Consult with an attorney to help you find the right path.

Even if you’re considering filing for personal bankruptcy, keep paying all the bills that you’re able to afford. Prioritize rent, utilities, child support, income taxes, and other important bills.

Chapter 7 Bankruptcy and Chapter 13 Bankruptcy

Declaring bankruptcy can provide you with a clean slate. If you’re looking to discharge credit card debt, medical bills, and other forms of debt, look into filing for Chapter 7 bankruptcy. However, if you’re looking to catch up on overdue mortgage payments, filing for Chapter 13 bankruptcy would be a better fit.

Learn more about the differences between Chapter 7 bankruptcy and Chapter 13 bankruptcy.

You are Protected Against Debt Collector Harassment

You have rights protecting you against debt collector and creditor harassment. While it is their job to collect debts, it is illegal for them to harass you. Here are some common debt colection problems. Thanks to the Fair Debt Collection Practices Act (FDCPA), debt collectors cannot call you repeatedly with the intention of annoying you, use profane language, not disclose their identity, or threaten you. Additionally, debt collectors cannot mislead you. Some examples of illegal misrepresentation are deceiving you about how much you owe or threatening you with false claims like being arrested.

Know your rights. If you experience creditor harassment, contact an attorney. Learn more about your rights here.

Obtain a Free Personal Bankruptcy Case Review Now

We are a debt relief agency dedicated to helping people get a clean slate. We help people declare personal bankruptcy relief under the Bankruptcy Code.  Contact us for a confidential free case review and find out how to move forward with your personal bankruptcy today!