Bankruptcy is a legal proceeding in which a person who cannot pay his or her bills can get a fresh financial start. The right to file for bankruptcy is provided by federal law, and all bankruptcy cases are handled in federal court. Filing bankruptcy immediately stops all of your creditors from seeking to collect debts from you, at least until your debts are sorted out according to the law.
Bankruptcy may make it possible for you to:
Bankruptcy cannot, however, cure every financial problem. Nor is it the right step for every individual. In bankruptcy, it is usually not possible to:
There are four types of bankruptcy cases provided under the law:
Most people filing bankruptcy will want to file under either chapter 7 or chapter 13. Either type of case may be filed individually or by a married couple filing jointly.
If your income is above the median income for a family the size of your household in your state, you may have to file a chapter 13 case (the median family income for a family of 4 in Kansas as of April 1, 2017 was $83,528-your state’s figures may be higher or lower, https://www.justice.gov/ust/eo/bapcpa/20170401/bci_data/median_income_table.htm is the website for current median income figures). An above median-income consumer must fill out “means test” forms requiring detailed information about income and expenses. If, under standards in the law, the consumer is found to have a certain amount left over that could be paid to unsecured creditors, the bankruptcy court may decide that the consumer can not file a chapter 7 case, unless there are special extenuating circumstances. This person could still file a Chapter 13 that could still provide substantial relief from debt as compared to not filing bankruptcy.
By William P. Turner, W M Law Attorney