Differences in Each State for Chapter 13 Bankruptcy Laws

Your bankruptcy filings are governed by the federal Chapter 13 laws. Though the federal US Bankruptcy Code gives guidelines for the regulation of bankruptcies in the whole of the nation, there are certain variations in each state. The differences come mainly in the median income involved in the means test or the value of the exempted property.

What is Chapter 13?

Chapter 13 is the bankruptcy code for filing a bankruptcy with the bankruptcy court. Whenever there is problem in clearing the debts, people try to resolve it with credit counseling, debt consolidation and so on. When everything fails, debtor has to file bankruptcy and Chapter 13 is one of them. It is also referred to as the wage earner bankruptcy because you can file under this chapter only when you have enough disposable income to pay back the debts in new installment schedule. This chapter also allows the debtor to prevent the foreclosure of their houses by paying mortgage payments as per the agreed plan in certain states (e.g., New Jersey, Georgia). Certain states like Georgia allow only filing under state exemptions, while some other states allow filing either under state or federal exemptions.

Means test

Every year, the US Census Bureau determines the annual median income for various family sizes in each and every test. You may be eligible to file bankruptcy under Chapter 13 code only if you pass the means test. Means test means the test to compare your annual income with the median annual income determined for your family size. If your income is lesser, then you may have to file bankruptcy under Chapter 7. You can file under Chapter 13 only when your income is equal to or higher than the median annual income of your family size. As this median income varies with each state, your eligibility may vary with each state.

Exemption of Assets

Exemption of assets is provided in order to let you keep certain basic assets with you. Assets like your house or mobile home, clothing, food items, vehicle, tools for work and so on are not taken into the bankruptcy trust for liquidation. Although most of the states allow almost similar list of assets to be exempted, they vary in the value of the assets in the exemptions list.

Getting Legal Aid

As these laws vary with each state, you may have to hire a bankruptcy lawyer of your state. As such a lawyer always has the updated information, you can rely on his/her legal advice.