One of the first questions people often have for a bankruptcy law attorney is about how hard the process is likely to be. Lawyers frequently respond with the answer that it will depend on a few things, so let's look at what three of the biggest factors might be.
Bankruptcy law presumes someone is eligible to file for relief if they make half of their state's median income or less per year. However, that doesn't mean everyone above that line is disqualified. Filers with greater incomes will have to provide more supporting documentation to show that their incomes aren't sufficient to pay down their debts. You can do this by showing your last two years' worth of taxes, and it's also a good idea to provide at least your last 6 months' worth of pay stubs or income statements. A judge will then rule on your eligibility.
Type of Bankruptcy
There are broadly two types of bankruptcies. First, there is debt restructuring. In this scenario, you submit a payment plan for an amount that's lower than your current debts. This plan must allow you to pay the debts within three to five years. Notably, you'll have to prove you can afford to make the payments based on your current income.
If a judge approves the plan, you will pay based on the schedule. Presuming you've made all of the payments, the court will discharge the difference between your original debts and what you paid. Chapter 11, 12, and 13 bankruptcies all fall within this category.
The second type of bankruptcy is liquidation. In this scenario, a court-appointed officer will sell off all of your non-essential assets and distribute the proceeds equitably to your creditors. The court will then discharge whatever isn't covered by the proceeds. Liquidation is known as Chapter 7, and going this route usually takes months rather than years.
Some filings can get pretty complex. For example, it may be possible to pursue both liquidation and restructuring. You might ask the court to discharge your credit card debt, and then you could subsequently file to restructure your mortgage to keep your house. This approach requires doing everything in the right order, and it's not a guaranteed fix.
You also may encounter complexities if creditors challenge your petition. For example, creditors can propose alternate restructuring plans for larger businesses filing Chapter 11. It can take some time for the court to study the case and decide which plan to go with.
For more information on your situation, contact a bankruptcy law attorney.