Short Answer: most likely yes. Read below for the long answer.
Chapter 13 is often times called a reorganization or payment plan bankruptcy. Some debts are discharged or reduced but most are paid off over a period of three to five years. To qualify, you must have income and you must be able to come up with an acceptable plan to pay off the debts.
Chapter 7 is often times called a liquidation. Your assets are sold (not all assets are sold, only non-exempt assets) and the proceeds are used to pay off debts. Any debt remaining is discharged.
To qualify for a Chapter 7, you must pass the means test. In other words, your income must be below a certain level. This excludes high income earners from Chapter 7. The exact cut off depends on family size and your State. The current table can be found here.
The means test looks at the last six months of actual income. You will need to substantiate the income by providing pay stubs and signing an affidavit stating that the income you have reported is accurate. Even though the bankruptcy court looks only at the last six months income, the table is written in terms of one year’s income. That means you double the six month income and apply it to the following table.
In Utah the cut-off is:
1 Person $48,176
2 Person2 $55,555
3 Persons $59,626
4 Persons $64,780
For each additional family member add $7,500.
If your annual income is less than the amount in the above table, you qualify. If it is higher, you may still qualify but it is much more complicated. You’ll need to call our office and set up an appointment for a full evaluation.
You are also ineligible if you’ve received a discharge under Chapter 7 within the past 8 years or a discharge under Chapter 13 within the past 6 years.