Bankruptcy Law

Bankruptcy Explained: The Qualifications and How to File

Filing for bankruptcy can be an emotional and sometimes stressful process. However, enlisting the help of an experienced bankruptcy attorney can make the process painless and worry-free.  Many clients have little understanding about what is involved when they file for bankruptcy.  Bankruptcy is a legal proceeding where a judge and bankruptcy trustee review the financial situation of individuals or businesses who are not able to pay their financial obligations and discharge qualifying debts that they are no longer able to pay.

The Purpose of Bankruptcy

Bankruptcy is meant to give an individual a fresh financial start, allowing that person to wipe the slate clean. It also serves as a way to give the filer some sense of relief through the protection of the automatic stay, which means creditors are prohibited from continuing collection actions against the filer. This allows the person time to regroup, protect valuable assets and work with the bankruptcy trustee to eliminate their debts.

Debts Versus Income

For the most part, the individuals who file for bankruptcy are carrying more debts than they have cash to pay them. The bankruptcy cases reported by the American Bankruptcy Institute (ABI) involved significantly more individuals than businesses. The median income for these filers was just over $34,392. They reported expenses of $30,972, which means that they had very little to pay for other debts after paying for their most basic living expenses.

Timing Your Filing

No precise formula exists for deciding when the right time is for filing. One good rule of thumb is to figure out how long it will take to pay down all of the person’s debts. If it will take more than five years to pay them, bankruptcy is a viable option. Additionally, if the person is struggling more with unsecured debts, including credit cards or medical bills, bankruptcy may be the best option to eliminate these debts.  obligations. A bankruptcy attorney can work with the person to decide when the right time is to file.

The Filing Process

Bankruptcy starts with filing a petition with the bankruptcy court, and this can be done either individually or with the assistance of an attorney. Costs are associated with filing, including court costs and filing fees, as well as attorney fees. Before filing for bankruptcy, the filer will be required to go through an approved credit counseling course that must be completed within 180 days before beginning the case. Also, before filing, the individual will need to decide which type of bankruptcy he or she wants to pursue, between Chapter 7 or Chapter 13 bankruptcy. If the individual wants to file a Chapter 7 case, he or she will need to pass the means test to show that the person’s income falls below a set threshold. Otherwise, if that individual does not pass the means test, he or she will likely need to pursue a Chapter 13 bankruptcy.

The length of time the bankruptcy case takes depends on which type of bankruptcy is involved. A Chapter 7 bankruptcy normally takes a few months to complete, while a Chapter 13 bankruptcy repayment plan takes anywhere from three to five years to successfully complete.

If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at

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