If you've decided that using bankruptcy is the only way out of your bad financial situation, you'll want to do your research to ensure that it's the right choice for you. Here are some things you should consider if you want to use bankruptcy to get out of your financial jam.


The qualifications for bankruptcy are more than simply having debt that you're unable to pay off. Be aware that there will be eligibility requirements for each form of bankruptcy. If you don't meet the requirements, it could end up delaying the bankruptcy process while you apply under a different form of bankruptcy.

When using bankruptcy under Chapter 13 rules, be aware that there are income requirements that must be met, and having too much disposable income can cause you to be disqualified. There is also a cap on how much debt you are looking to discharge, and having too much unsecured debt can cause you to be ineligible.

For Chapter 7 bankruptcy rules, you'll need to have household income that's below the a certain amount. The income limit is usually based on the median income in your state for households of a similar size.

Bankruptcy Option Differences

There are some major differences between using Chapter 7 or Chapter 13 bankruptcy to get rid of debts. When using Chapter 7, be aware that you'll have the majority of your personal debts discharged, meaning that you won't have to pay them back. Creditors that you owe money to will not be allowed to contact you about those debts either, since you are protected from being harassed by creditors with your bankruptcy filing.

When using Chapter 13 rules, the big differences are that secured debts will need to be repaid. Part of the process is creating a proposal that is submitted to the court which details how the debts will be paid back. It involves consolidating all of your debts and making a single monthly payment, which is then divided between all of the creditors that you owe money to. Unsecured debts will be discharged and not need to be repaid. Chapter 13 is often required when your income is too high, taking it above the median income in your state.

Need more information about using bankruptcy? Speak with local chapter 13 bankruptcy lawyer services in your area. They will help guide you through this complicated process and ensure it is done correctly.