Bankruptcy: Conditions under which you can file a bankruptcy

There are certain cases where you cannot file a bankruptcy under Chapter 7 or Chapter 13. If you have a Chapter 7 bankruptcy which has been discharged within the last eight years or a chapter 13 bankruptcy discharged within the last six years, you are not eligible to file a bankruptcy again. However, if your Chapter 13 bankruptcy has been discharged on payment of at least 70% of the unsecured debt amount, this six years bar will not be applicable for you. Moreover, if your previous bankruptcy (Chapter 7 or Chapter 13) has already been dismissed within 180 days, you become ineligible for filing any of the two types of bankruptcy. The years are considered from the date the bankruptcy was filed and not from the date you have received a discharge on the bankruptcy.

Now as per the recent bankruptcy law, if you want to file a bankruptcy, you need to undergo a credit counseling program within 180 days of filing bankruptcy and submit a certificate that you have completed the credit counseling program within 15 days of filing bankruptcy in the bankruptcy court. For filing bankruptcy, you need to be a honest debtor in the sense that you should not transfer your property to your friends or relatives to show that you do not have any assets and means to make payments under Chapter 13 bankruptcy and you may be allowed to file a Chapter 7 bankruptcy. In such cases, the court can dismiss your bankruptcy petition.

Even if you qualify for Chapter 7 bankruptcy, your petition may be dismissed if you do not have proper explanation as to how you have spent the cash advances and the reason behind this huge debt. Moreover, if you are undergoing voluntary unemployment in the hope of getting qualified to file a Chapter 7 bankruptcy, your petition can also be dismissed.

Since under Chapter 7 bankruptcy, the Federal Court can order sell of some of your assets to repay a part of the loan and discharge the remaining portion, if you have some assets, like your home, which you would like to keep back, you need to consider going for Chapter 13 bankruptcy as it allows you to keep back your property if you have sufficient income to repay back the outstanding loan amount within a three to five year time frame. If you have huge amount of debt or you have already filed a Chapter 7 bankruptcy within eight years or a Chapter 13 bankruptcy within six years, and you do not qualify for filing bankruptcy, then just do nothing and wait for the creditors to respond first. Now if you don’t have a source of income and the creditor sues you for the debt and judgment against you, they would not be able to collect the outstanding debt because you have nothing to lose. Even if the creditor brings judgment against you, they cannot take away your personal property like clothing, furnishers and other belongings to recover the debt as per the Federal law.