How do you not qualify for bankruptcy?
Bankruptcy is a legal proceeding that will relieve you of some or possibly all of your debts. However, you must qualify for bankruptcy protection.
The bankruptcy court will consider all of your available assets, potentially including your income and other assets such as savings and possibly property that could be used to repay your debts. These will be considered in determining the type of bankruptcy you can file.
There are two classes of bankruptcy that generally apply to consumers. Under Chapter 13 bankruptcy, you are required to repay at least a portion of your debts from existing income and other assets. Under Chapter 7 bankruptcy, you are not required to repay any of the debts covered by the bankruptcy.
If the court determines your assets are sufficient to repay your debts, you may not qualify for bankruptcy protection at all. There is also a requirement to complete financial management training so that you don’t repeat the same mistakes.
Chapter 13 bankruptcy will remain in your credit report for seven years from the filing date because you repay at least some of the debt. Chapter 7 remains 10 years because none of the debt is repaid.
The presence of a bankruptcy in your credit history is perhaps the strongest indicator of credit risk and can make it difficult to obtain credit as long as it remains. If you are able to obtain credit following bankruptcy it usually has very high interest rates or associated fees.
In other words, it is probably not the kind of credit you would prefer.
Thanks for asking.
- The “Ask Experian” team