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What Is Consumer Bankruptcy?


Have you been considering the possibility of filing for bankruptcy? If you have never been involved in a bankruptcy proceeding before and have never filed for bankruptcy, the process can be extremely confusing and complicated. Even when you have experience with consumer or business bankruptcy, the specific requirements for each type of bankruptcy are nuanced and complex, and it is important to work with a lawyer who has experience handling these types of cases. When you run a search for bankruptcy, you are likely to come across a number of descriptions, including those that describe the chapter of the bankruptcy filing and those that describe who (or what) is filing for bankruptcy, including both individuals and businesses. What is a consumer bankruptcy, specifically? And is a consumer bankruptcy the right type of bankruptcy for you? Our bankruptcy lawyers in West Palm Beach can give you more information.

Consumer Bankruptcy Refers to Bankruptcy for Individuals 

What is consumer bankruptcy? This term is used to refer to a bankruptcy filing for an individual debtor under the U.S. Bankruptcy Code. Consumer bankruptcy is sometimes referred to as “personal bankruptcy,” or “individual bankruptcy.” While the terminology is usually used in the singular, you should know that married couples can file a joint consumer bankruptcy petition. The key thing to know about the term “consumer bankruptcy” is that it is a type of bankruptcy filed by an individual or a person, whereas a “business bankruptcy” is a type of bankruptcy filed by a bankruptcy as an entity.

Within the term “consumer bankruptcy,” there are different types of bankruptcy for individuals. The most common types of consumer bankruptcy are Chapter 7 bankruptcy cases and Chapter 13 bankruptcy cases. In some circumstances, consumers file for Chapter 11 bankruptcy when they are ineligible for Chapter 13. You should know that Chapter 13 bankruptcy is only for consumers or individuals, but businesses can also (and commonly do) file for Chapter 7 and Chapter 11 bankruptcy.

Eligibility for Consumer Bankruptcy 

How can you determine whether you are eligible for consumer bankruptcy? It is important to understand that eligibility depends upon the type of consumer bankruptcy you are planning to file for, rather than an overarching eligibility for consumer bankruptcy. Indeed, eligibility for Chapter 7 bankruptcy for consumers is quite distinct from eligibility for Chapter 13 bankruptcy for consumers.

In order to be eligible for Chapter 7 bankruptcy, you will need to show that your income and assets are low or limited enough such that a liquidation bankruptcy would not be abusive. For most consumers, to prove eligibility for Chapter 7 bankruptcy, you will need to pass something known as the “means test.” Eligibility is much different for Chapter 13 bankruptcy. Since this is a type of reorganization bankruptcy that requires the debtor to make regular payments, eligibility depends on showing that your income is high enough and regular enough to meet the payment requirements.

Contact a West Palm Beach Bankruptcy Attorney Today 

When you have questions about the consumer bankruptcy process, or you need more information about your eligibility for Chapter 7 or Chapter 13 bankruptcy, you should get in touch with a lawyer who can help you. One of the experienced West Palm Beach bankruptcy attorneys at Kelley Kaplan & Eller can learn more about your circumstances and provide you with information about individual bankruptcy today. Do not hesitate to get in touch with us to find out more about how our firm can assist you.



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