Can an individual file for bankruptcy?

 

Can an individual file for bankruptcy?
Profile photo for Tim Cella
Tim Cella
used to work at several law firms

Short answer: yes. Long answer: get a bankruptcy lawyer to help you.

Individuals can file for bankruptcy under specific circumstances. Bankruptcy is a legal process that helps individuals or businesses that are unable to repay their debts to get a fresh financial start by liquidating assets to pay off debts or by creating a repayment plan. I’ve worked as a paralegal helping literally hundreds of people file for bankruptcy.

Here are some key points regarding individual bankruptcy filings:

  1. Types of Bankruptcy for Individuals (most common):
    1. Chapter 7 Bankruptcy: Also known as "liquidation bankruptcy," Chapter 7 involves the sale of nonexempt property to pay off creditors. Any remaining eligible debts are typically discharged.
    2. Chapter 13 Bankruptcy: Also known as "reorganization" or “wage earners bankruptcy” — Chapter 13 allows individuals to create a repayment plan to pay off debts over a period of three to five years. This plan is based on the individual's income and expenses. You need to have regular monthly income to qualify for a chapter 13.
  2. Eligibility: Eligibility for bankruptcy is determined through a means test, which evaluates an individual's income compared to the median income in their state. If the individual's income is below the median, they typically qualify for Chapter 7. If it's above, they might need to file for Chapter 13.Additionally, individuals must undergo credit counseling from an approved agency within six months before filing for bankruptcy.
  3. Automatic Stay: *This is probably one of the most important parts of bankruptcy* — Once an individual files for bankruptcy, an automatic stay goes into effect, which halts most collection actions by creditors, including lawsuits, wage garnishments, and foreclosure proceedings.
  4. Exempt Property:Each state has its own set of exemptions that determine which property an individual can keep during bankruptcy. Exempt property typically includes necessities such as a primary residence, vehicle, clothing, and household items.
  5. Non-Dischargeable Debts:While bankruptcy can discharge many types of debts, there are certain debts that cannot be discharged, such as child support, alimony, most tax debts, student loans (with few exceptions), and debts resulting from fraudulent activities or intentional harm.
  6. Credit Impact:Filing for bankruptcy will have a significant negative impact on an individual's credit score and can remain on their credit report for up to ten years. However, individuals can begin rebuilding their credit over time.
  7. Legal Assistance:While it's possible for individuals to file for bankruptcy without an attorney (pro se), it's highly recommended to seek legal assistance from a bankruptcy lawyer. A lawyer can help navigate the complex legal processes, ensure all necessary paperwork is filed correctly, and represent the individual's interests in court.

If you’re in Utah - call this bankruptcy attorney:

Jeremy Eveland

8833 S Redwood Rd

West Jordan UT 84088

(801) 613–1472

https://jeremyeveland.com

Location: West Jordan, UT, USA

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