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Bankruptcy Frequently Asked Questions

Can I File Bankruptcy?
The first question many clients ask is whether they are eligible to file for bankruptcy. The basic eligibility requirements provide that a debtor can file a bankruptcy as long as they have not filed for the same type of bankruptcy in the last few years. Additionally, in order to qualify for a Chapter 7, the borrower must pass the Means Test. Our office strives to 

Chapter 7 v. Chapter 13
There are two primary types of bankruptcy for individuals: Chapter 7 and 13. Chapter 7 is what most people think of when they hear "bankruptcy." Under Chapter 7, the debtors list their income, debts, and assets and asks for complete discharge of all debts. Chapter 13 is often called a repayment plan. Under Chapter 13, the debtors enrolls in a monthly repayment plan where they make equal monthly payments for 3-5 years to pay off the debts. After completion of the plan, the past due debt is discharged. Each client is different and should consult an attorney to develop the best plan of action. 

How to choose between Chapter 7 and 13?
This largely depends on whether the debtor is eligible for one or both of the bankruptcy options. For a Chapter 7, the debtor must pass the Means Test, which is a test to determine if the debtor makes too much money to qualify for a Chapter 7. If the debtor fails the test (the income exceeds the income limit), then she may not qualify for a Chapter 7. However, an experienced bankruptcy attorney can help you qualify for a Chapter 7. 

Chapter 13 is a repayment plan, meaning that it is preferred by individuals who seek to catch up on the past due payments, rather than to discharge their debt. There are no income limitations or requirements to sell property under Chapter 13. But the monthly repayment amount is based on the disposable income. In Chapter 13 cases, our focus is on coming up with a repayment plan that is most beneficial to our clients. 

To learn more about Chapter 7, click here.

To learn more about Chapter 13, click here.
What Kind of Debts Can be Discharged?
Bankruptcy can be a great tool to deal with debt. The typical debts discharged in bankruptcy include:
-      credit card debt
-      medical debt
-      personal loans
-      personal judgments; and
-      wage garnishments.
But not all debts can be discharged through bankruptcy. Specifically, the following debts usually cannot be discharged:
-      student loans (but there are exceptions) 
-      government tax obligations
However, in some cases, we can assist with discharging student loans, and other difficult debts.  
Calvo Law Offices, P.C.
1700 Park Street, Suite 211, Naperville
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