In order to prevent abuse of the bankruptcy system there are some strict rules and requirements that guide the process. Many of these restrictions have very little effect on the common debtor, but understanding some of the basics about what you might face could put you ahead of the game when you file.
Reviewing The Rules
The first limitation that could be faced in the Dayton bankruptcy process is passing the means test. This test is used to determine your eligibility for Chapter 7 bankruptcy. It is a formula that evaluates your income compared against the median income level of your state of residence. If your income is less than the median income level of the state, you pass and are eligible for Chapter 7. If your income is greater than the median income level of the state, your total debt burden and household size will be taken into consideration to determine whether your disposable income is sufficient for debt repayment. Having an insufficient amount of disposable income will allow you to qualify for Chapter 7, otherwise you may have to file for Chapter 13.
Another consideration that could influence your case relates to your debts. Not all debts are eligible for bankruptcy protection. Student loan debts, some tax debts, back-due domestic support payments, and criminal restitution payments are generally not eligible for bankruptcy. However, there are more common debts that are brought into bankruptcy, such as medical bills, credit card debt, a car or mortgage loan debt. While these common debts are eligible in most cases, there is also a limit to the amount of debt that can be discharged in bankruptcy. As of 2011, the limit for the amount of unsecured debt eligible for a Chapter 13 bankruptcy is $336,900, and $1,010,650 for secured debts.
The last influential limitation in bankruptcy is how often one can file bankruptcy. The rules for filing bankruptcy multiple times are pretty clear. If you obtained a debt discharge in a prior Chapter 7 case you must wait 8 years to file for another Chapter 7, or 4 years to file for Chapter 13. If your debts were discharged in a prior Chapter 13 case you must wait 6 years to file for Chapter 7, or 2 years to file for another Chapter 13 case.