What if you find out you’re not eligible for Chapter 7 bankruptcy? For Texas bankruptcy, this problem is unfortunately common. However, many are still eligible for bankruptcy. Under new bankruptcy code, you are eligible based on income. For Texas residents, the numbers are as follows.
1 Person – Annual Income Less Than $38,801
Family of 2 – Annual Income of Less than $55,660
Family of 3 – Annual Income of Less Than $59,011
Family of 4 – Annual Income of Less than $66,145
Add $7,500 in most cases per any more family members.
That’s the laws for Texas, and are different for other states. If you, for instance, are a married family of 3 including one child, and you make $50,000 combined, you are likely eligible. If you make $65,000 combined and you live in Texas, you are not eligible. Again, these are the numbers for Texas median incomes. For other states, look on the web for the 2010 annual median income and you can find out.
What is Chapter 7 Bankruptcy?
For Texas and other states, the main goals of Chapter 7 bankruptcy are pretty common. One of the biggest reasons individuals and families file for bankruptcy is because of medical bills; some studies say as many as 60% of bankruptcies are caused by medical problems. Chapter 7, a liquidation proceeding, can eliminate these debts.
What if You Make too Much Money?
Okay, so you’re not eligible for Chapter 7. What are your options? You can still file under Chapter 13. Chapter 13 is a debt repayment plan; you pay back debts instead of discharging them. The good news is, there are key advantages to Chapter 13.
What if You’re Behind on Mortgage Payments?
One of the biggest benefits of Chapter 13 bankruptcy is being able to keep your home. Say you are married, you and your spouse make $80,000 year, and you have two children. You make too much, for Texas residents at least, to file for Chapter 7. But, if you own a home and want to keep it, you can successfully head off foreclosure with Chapter 13. How? Chapter 13 comes with an “automatic stay” where your creditors cannot seize any property. If you are eligible, if you can maintain mortgage payments, you can save your home.
How Do You Qualify for Chapter 13?
If you make too much for Chapter 7 bankruptcy, Chapter 13 is a good option. Now, you still have to be eligible. For every citizen the of the U.S. there is a set amount for Chapter 13 eligibility. You must have secured debts less than $1,010,650, and unsecured debts of $336,900. Most are easily eligible.
Can You Negotiate Outside Bankruptcy?
Yes, there are alternatives to bankruptcy. Bankruptcy has negatives; it would be wrong to say otherwise. But more often than not, simply negotiating with creditors or hoping you get enough money to pay back debts does not work. If you are one of the many with high credit card and/or medical debt, Chapter 7 is your best option. If you have a high paying job but are falling behind on bills and mortgage payments, Chapter 13 is very good.
