Sarah Edwards | March 01, 2023
Summary: Consumers debt, as defined by bankruptcy laws, includes unsecured debts like credit cards and medical bills, accounts in collections, legal judgments against you, unpaid rent, payday loans, utility bills, tax debts that are more than three years old. They also involve secured debts like a mortgage or a car. Some debts cannot be discharged through filing bankruptcy, including alimony or child support, current tax liens within the past three years, debts from a successful lawsuit resulting in physical injury or property damage, personal injury claims created by driving while intoxicated, and debts not included in your bankruptcy listing.
If you’re considering bankruptcy to eliminate your debts and rebuild your financial health, you’ll want to understand how it works. There are two types of bankruptcies that individuals typically may file: Chapter 7 and Chapter 13. Both have different requirements that consumers must meet, and both can erase specific types of debt.
Bankruptcy is the legal procedure of restoring an individual’s finances by eliminating debt. The process begins with hiring a bankruptcy attorney who examines your financial situation to determine which type of bankruptcy you qualify for—a Chapter 7 or Chapter 13.
Once you choose the appropriate type of bankruptcy, you’ll list your qualifying debts, including their current balances and account information. The attorney will handle all the legal aspects, including your court filings, motions, and communication with creditors.
You’ll appear in federal court before the judge, who may ask specific questions about your finances.
When the judge approves your case, one of two things will happen, depending on the type of bankruptcy you file. You may have most unsecured debts eliminated, or you may begin a court-ordered repayment plan to pay off some of your obligations.
Dial 888-790-4291. SoloSuit partners with the Free Bankruptcy Advice Helpline.
In a Chapter 7 bankruptcy, you’ll need to meet specific requirements to file. The requirements include the following:
The means test varies from state to state and compares your total income to the median for your state. Living in a more costly state, like New York, will have a higher income ceiling than living in a location with lower median wages, like West Virginia.
You will prove your disposable income through various legal documents that subtract necessary expenses, like rent and food, from your current income.
Individuals who qualify for Chapter 7 bankruptcy can eliminate most unsecured consumer debts, like:
If you have any secured debts, like a mortgage or a car, a Chapter 7 bankruptcy can discharge them. However, you will lose your home and your vehicle.
It is possible to keep your home and vehicle if you file for Chapter 7 bankruptcy. A lawyer can advise you of the appropriate steps to take.
A Chapter 13 bankruptcy doesn’t have the stringent requirements of a Chapter 7 bankruptcy. You won’t need to meet a means test, so higher-income individuals can apply. Some of the other conditions include the following:
If you maintain your regular payments, the court will discharge any of your remaining debt once the payment plan ends.
Chapter 13 bankruptcy is advantageous to people with significant equity in their homes or vehicles since they’ll be able to keep their property even though they’ve declared bankruptcy.
Individuals who declare Chapter 13 bankruptcy can eliminate some portions of their unsecured debts, including:
An attorney can help you determine which debts are dischargeable and what your repayment plan may consist of.
Some debts can’t be discharged through bankruptcy, no matter how dire your financial situation is. The federal bankruptcy code exempts these debts from both Chapter 7 and Chapter 13 bankruptcies:
Other debts may be dischargeable, but you’ll need to take extra steps to remove them, including:
Working with an attorney can help you determine which debts qualify for a potential discharge in your case.
Remember that bankruptcy is a very serious matter. If you declare it, you will damage your credit for years. However, in some cases, bankruptcy is the only solution for escaping from the confines of an adverse financial situation.
When debt collectors start contacting you nonstop, it’s normal to feel overwhelmed. If you get sued for a debt you owe, that overwhelming feeling will probably only escalate.
Luckily, you have resources that can help you fight off debt collectors and find the relief you need. SoloSuit is one of those resources. Here are some of our services that can help you beat debt collectors in and out of court.
To avoid a debt collection lawsuit, try sending a Debt Validation Letter to the debt collector within 30 days of their first communication. This forces them to validate the debt, including all records and documentation of it. If they can’t, they’ll most likely leave you alone.
If you’ve been sued for a debt, the most important thing to do is respond to the lawsuit with a written Answer. Most debt collectors hope you don’t respond to the case so they can request a default judgment against you. If granted, a default judgment gives collectors the right to garnish your wages and seize your property.
You can increase the chances of winning your debt collection lawsuit by 7x by using SoloSuit to respond to the case.
Check out this video to learn more:
After you’ve responded to a debt collection lawsuit, you can reach out to the collector at any stage and make an offer to settle the debt. You may have the funds to pay off a portion of the debt. Most collectors are willing to settle for a percentage of what you originally owed.
You can make an initial offer and start the debt settlement negotiation process with SoloSettle.
SoloSuit makes it easy to fight debt collectors.
You can use SoloSuit to respond to a debt lawsuit, to send letters to collectors, and even to settle a debt.
SoloSuit's Answer service is a step-by-step web-app that asks you all the necessary questions to complete your Answer. Upon completion, we'll have an attorney review your document and we'll file it for you.
Here's a list of guides for other states.
Being sued by a different debt collector? Were making guides on how to beat each one.
You can ask your questions on the SoloSuit forum and the community will help you out. Whether you need help now are are just look for support, we're here for you.
Is your credit card company suing you? Learn how you can beat each one.
Need more info on statutes of limitations? Read our 50-state guide.
Need help managing your finances? Check out these resources.
Out Debt Validation Letter is the best way to respond to a collection letter. Many debt collectors will simply give up after receiving it.
"Finding yourself on the wrong side of the law unexpectedly is kinda scary. I started researching on YouTube and found SoloSuit's channel. The videos were so helpful, easy to understand and encouraging. When I reached out to SoloSuit they were on it. Very professional, impeccably prompt. Thanks for the service!" - Heather