When an individual feels as though they are faced with debt that they may never be able to repay, it may be time to consider filing for bankruptcy. There are two types of consumer bankruptcy: chapter 7 and chapter 13. Before knowing which form of bankruptcy an individual is eligible for, they must take a bankruptcy means test. The means test compares the debtor’s combined household income to the average household income of the county where they live. For example, in Queens, the median household income between 2012 and 2016 was $59,758. If the debtor resides in Queens and wishes to file bankruptcy and has a household income greater than this amount, they will have to file Chapter 13 bankruptcy. If a debtor’s household income is less than this amount, they can file Chapter 7 bankruptcy.
In a Chapter 7 bankruptcy, the individual will liquidate some assets in order to have certain debts discharged such as credit card debt and other personal debt. Chapter 13 bankruptcy is a little different simply because the individual filing has a regular income that is capable of making payments. This form of bankruptcy allows the debtor to make a repayment plan for the next 3-5 years and anything left over will be discharged after that.
If you have questions about bankruptcy, contact our firm today.
The Law Offices of George Poulos is an experienced Workers’ Compensation, personal injury, bankruptcy, and Social Security Disability law firm with offices in Queens and the Bronx. If you require strong legal representation, contact our firm today to schedule a free consultation.