Qualification For Bankruptcy- Comparing Your Income With The State Median
Bankruptcy is a financial state which is characterized by many liabilities and few assets, such that repayment of those liabilities proves to be an uphill task. At such times, one is advised to file for bankruptcy, in other words, to go public about the situation so that creditors may be aware and they hence cease from following you up asking for their dues. Once you have filed for bankruptcy, the law protects you from harassment and in fact, your creditors are not allowed to contact you directly, but only through your representative or lawyer.
Filing for bankruptcy does not just happen. There are a few qualification factors that you must possess for you to be considered as bankrupt. To begin with, if you are filing for bankruptcy as an individual, you can only file under chapter 13 or 7 of the bankruptcy laws. However, if your income before bankruptcy was too high, chapter 7 does not apply for you. You can only file under chapter 13. Your income is considered to be high if it goes beyond the median income of the state you live in.
To determine whether your income is higher than the state median, you must consider all your gross income, tax excluded, for the last six months. In comparison to the state median, this figure must be higher than that for median personal gross income in the state you live in. The figure is also compared to that of people who have the same number of household members. Lastly, the median income should be adjusted for inflation since the last census.
If all these factors put together indicate that your income is lower than the state median, then you can qualify for chapter 7 bankruptcies. If your income is higher but you still want to file under chapter 7 for a specific reason, then a more detailed calculation must be used to determine whether you are able to repay your debts or not. The calculation takes into consideration your disposable income.
Peter Gitundu Creates Interesting And Thought Provoking Content on Finance. For More Information On Filing bankruptcy, Read More Of His Articles Here REFINANCING AFTER BANKRUPTCYYou Can Also Add Your Views About Filing bankruptcy On His Blog Here FILING BANKRUPTCY
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