Eligibility Requirements For Chapter 7 Bankruptcy

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When you file for personal bankruptcy such as a Chapter 7, the courts require that you meet certain income eligibility requirements. If you don't meet these requirements, the judge will rule that you can't file for bankruptcy.

The income eligibility requirements for a foreclosure filing are based on a variety of factors. Your income, your monthly living expenses, and your overall debt load all come into play. The courts in each state will use a set of specialized calculations, specific to that state, to determine if your bankruptcy case can go forward.

In determining your qualifications, there are various kinds of debts that the courts have to take into account. One of the most important types of debts is secured debts.

So, what exactly is a secured debt? It is debt where if you fail to pay the lender according to the terms of the contract, he can repossess the property used to secure the loan. Probably, the most well known type of secured debt that Americans are familiar with is the home mortgage. If you miss a certain number of payments and default on your mortgage, the creditor can begin foreclosure procedures to take ownership of the home.

But there are other ways that a debt can become secured as well. For example, if a contractor does work on a home and you don't pay him, he may file a lien against your property. Once he does this, your home becomes a secured debt. You cannot sell your home before the lien amount is paid off.

Your home equity loan is also considered a secured type of debt. This kind of loan is really a second mortgage. As a result, the rules for defaulting on it are pretty much the same as the rules for defaulting on your primary mortgage. Some of the less high-ticket types of secured debts are items like cars, boats, trailers, RVs, and the like. When you sign the loan papers to buy these items, you are promising the lender that if you were to fall behind in your payments, that the lender can repossess the property.

There are many other less common types of secured debts. Many times when a bank gives a personal loan to a person, they will ask for collateral. If somebody sues you and wins a monetary award, depending on the state, a lien can be placed on your home as well as other personal property that you may own. And, lastly, taxing authorities such as the IRS can secure a lien against your home to collect back taxes.

When you file for bankruptcy, establishing your secured debts is an important factor in helping the judge to decide if your bankruptcy request can go forward.

Article Source: http://depositarticles.com/

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