People looking to file for bankruptcy often come into the office and ask if their “bankruptcy will go through.” It is a tough question because it is somewhat difficult to answer. Most people are eligible for a bankruptcy discharge. The discharge eliminates liability that the person filing for bankruptcy would otherwise have. The bankruptcy stops all collection efforts. If the individual obtains a discharge, those collections efforts, for the most part, cannot return. Thus, for those people that have struggled through phone calls, letters, and threats of creditors, it is important that those actions, along with the fears of the bankruptcy filer, do not return.
Some people simply do not qualify to file bankruptcy, at least under a given chapter. For example, Chapter 13 is limited to individual debtors, not business entities. Additionally, Chapter 13 puts limits on the total amount of debts, both secured and unsecured. The current debt limits on Chapter 13 are $1,149,525 for secured debt and $383,175 for unsecured debt. If your debt is over those limits you do not qualify to file for Chapter 13.
Another requirement for consumer or individual bankruptcy is that each person must complete a credit counseling course prior to filing. This is a course that can be done online, over the phone, and even in person. Bankruptcy Debtors must also complete a second counseling course before their case is closed. If a debtor does not complete that course, the court will close the case without a discharge.
Lastly, and this is and will be discussed elsewhere, those who do not believe that their individual debts, or all debts, should not be discharged can file an “adversary proceeding” which objects to the bankruptcy filing. This is done by the creditor filing a complaint in the bankruptcy case, and potentially ending with a trial.
The question of whether the bankruptcy will go through is somewhat complex. Most people have nothing to worry about. However, there are, as with most things in life, there are pitfalls.