Hi Customer (name blocked for privacy):

Yes you are probably eligible for bankruptcy. However, whether or not you are eligible for Chapter 7 is iffy. According to the Means Test, anyone who has made over ~$19,000.00 gross in the past 6 months has to fill out a complicated form to see if he or she can qualify for Chapter 7. If you make $40,000/yr, then you should have made around $20,000 in the past 6 months, which may make you exceed the income maximum and subject you to the full test. If you can pass the full test, you may still be able to file Chapter 7.

However, even if you fail the Means Test, you can still file Chapter 13, which usually requires you to pay as much as you can afford to the court for 60 months, and that money is disbursed to creditors. At the end of the 60 months, you are debt-free (in many cases - some debts don't go away in any chapter of bankruptcy, such as student loans, taxes less than 3 years old, back child support, etc). In the Chapter 13, it doesn't matter if you pay 5% or 95% of what you owe, as long as you pay as much as you can afford for 60 months, then whatever debt is not paid is wiped out.

Chapter 13 is much better than trying to pay $70,000 at 21% interest in most cases since Chapter 13 is not interest-bearing and it does not matter what percentage of debt gets paid off as long as you pay as much as you can afford (generally speaking).

Of course it is much more complicated than this, so I recommend your seeing a bankruptcy attorney to discuss your situation in detail. Many attorneys have free consultations. If you would like to read more about bankruptcy, go here. If you would like to see some bankruptcy attorneys in your area, go here.

I hope this helps and a positive feedback is always appreciated if this was useful to you.

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