Arkansas residents who are thinking about filing for bankruptcy should understand the different types that are available to individuals and how they can help a debtor obtain debt relief. For those who have medical bills or are behind on credit card payments, it may be possible to have those unsecured debts discharged through Chapter 7 bankruptcy. To be eligible to file for Chapter 7, the individual must be able to pass a means test and an income test and go to credit counseling.
A debtor who cannot pass both tests will then be required to file for Chapter 13 bankruptcy. Debtors may also be required to file for Chapter 13 bankruptcy if they are looking to reorganize student loan or tax debt even if they would otherwise qualify for Chapter 7 bankruptcy protection. Chapter 13 bankruptcy allows an individual to reorganize their debt and repay it over a period of time.
When filing for Chapter 13 bankruptcy, that person needs to state how much they owe, who their creditors are and attest to the fact that their statements are accurate. One aspect of bankruptcy is that the court will prevent creditors from taking any action against a person after the petition has been filed. Cosigners will also be afforded the same protection even if they are not filing themselves.
It is important for debtors to understand their rights and responsibilities when it comes to filing for bankruptcy. Depending on the type of debt that is owed and the resources that a debtor has, it may be necessary to repay some or all of the outstanding loan balances. Talking to a bankruptcy attorney may be able to help those looking for debt relief understand their options and whether they must repay a portion of their debt as opposed to writing it off completely.
Source: Ebony, “The Different Degrees of Bankruptcy, Explained“, Lynnette Khalfani-Cox, June 19, 2014