So, who can file for Bankruptcy?
Anyone who is an individual or an organization and is insolvent can file for bankruptcy. An individual is able to file for bankruptcy if he has obtained credit counseling within 180 days before filing the case.
To be able to file for Chapter 7, your income should not be more than your state’s median income calculated by an income test, which is called as the means test. The means test was part of the bankruptcy reform act.
If you happen to not pass the means test than you can not file for chapter 7 relief and may be eligible to file for chapter 13 bankruptcy relief. When you file for Chapter 13 Bankruptcy you also have to file a plan in which you specify how much monthly you will be paying back to your creditors. In New Jersey there are only two types of plans that you may file, either a thirty six months plan (36) or a sixty month plan (60).
Also, to file for Chapter 13 you must have regular income. To qualify to file for chapter 13 bankruptcy you may not be a business entity. You may not be barred by a prior bankruptcy. If the debtor is discharged debt in a Chapter 13 bankruptcy within the last two years he may not re-file. The Debtor may not have been a chapter 7 Debtor within the last four years.
Chapter 13 requirements impose a limit on the amount of a filer\’s debt. Chapter 13 is available to debtors with less than $336,900 in unsecured debt (debts that are not secured by property, such as credit card debt and medical bills) and less than $1,010,650 in secured debt (debts in which a creditor can take the property securing the debt if it is not paid). Every three years debt limits are adjusted for inflation. Finally a previous bankruptcy may not have been dismissed within the last 180 days.
The debtor filing for bankruptcy may also be an insolvent government entity or municipality. This can include districts, towns, counties, transport and utility authorities. These entities have to be authorized generally by the state law to be debtor. These debtors can only file under Chapter 9 bankruptcy.
Corporate organizations if insolvent, can file for corporate bankruptcy under chapter 11, which allows them to continue operation, while reimbursing according to the reorganized plan.
In order to file under chapter 12, you must be a family farmer or fisherman with regular income. You can either be a partnership or you can also avail the benefits with your spouse, given that the spouse is involved in commercial farming or fishing. You are qualified if more than half of your income comes from these operations. You can avail benefits like increased debt restriction, and exemptions in addition to chapter 13 bankruptcy, if your debts fall within the approved limit.