However, there are two interesting questions around seeking credit after bankruptcy:

1. Do you really need credit?
2. If you do not really need credit, then should you avoid it?

Analyze your financial situation and draw up your financial plan

This is an absolute must for everyone and if you have been through bankruptcy then it becomes even more necessary that you create a financial plan and stick to it. Your financial plan should include your assets, liabilities, income, expenses, long/short/medium term financial goals and emergency fund needs. You might want to get a new car or buy your own home or buy some latest gadgets or dresses… but if your financial plan does not allow it then you should avoid such expenses and move them further into future when you are financially stronger. Getting loans for car, home etc. should be avoided and it should all be governed by financial discipline and your overall financial plan.

Improving your credit score after bankruptcy is very important

So, if you don’t really need credit should you avoid it? – Answer is both ‘Yes’ and ‘No’. ‘Yes’ because you should avoid loans and ‘No’ because you it is recommended that you get a secured credit card and use it as a means for improving your credit score.

Since getting any kind of unsecured loans after bankruptcy is very difficult, most people are left with the option of getting a secured credit card. Here it is important to mention that in any case you should not be treating the secured credit card as a credit line for serious borrowing. It has to be strictly treated as a credit history improvement mechanism. So, you should use it to such an extent that you are able to make full payment every month on your secured credit card. Also, ensure that the payment is made well in time.

Similarly, you should be paying all your other bills and taxes etc. in time and in full amounts too. All these will add to your credit history and will help you rebuild your credit score.

Getting loans after bankruptcy

As mentioned earlier, it is almost impossible to get any kind of loan after bankruptcy. However, if you are able to get any sort of loan after bankruptcy, it would have very harsh interest rates and terms. Also, getting loans would be particularly tough for first 2 years that follow your bankruptcy discharge. Moreover, the lenders would have an even stringent list of qualification criteria for people with bad credit history.

Where to get a loan after bankruptcy?

Since getting a loan after bankruptcy is very difficult, a lot of people ask this question – ‘Where to get a loan after bankruptcy’. This is important also because you will need to find reliable lenders who are ready to lend to people with bad credit history. The best way to find such lenders would be through references from friends and family members who have had any experience (good experience) with these lenders. After that it would be a tough negotiation for you. But make sure that you carefully go through and understand all the terms and conditions before agreeing to them.

In any case, you should seek advice from a seasoned credit advisor/lawyer that deals in such matters as getting credit after bankruptcy.

If there is one thing that investors today can take full advantage of that investors in the past could not, it is the information that used to be given only to the elites of the financial world. Nowadays, the financial information that you need to make money or break out of debt is all freely available online for the average person to access and use as he or she pleases. What this means is that you can get the information that you need to do these things from the Internet without having to call anyone or go through any type of bureaucracy or financial hierarchy.

One of the more helpful types of information sites that you can find online is the price comparison site. The first thing that most individuals and families have to do in order to break out of debt is to somehow find a way to cut back on expenses. The easiest way to do this is to find the lowest price on things that you would think are untouchable, such as car insurance, property insurance and many other bills that companies would prefer you not negotiate.

The truth of the matter is that many bills that seem like rock-solid, nonnegotiable items, are actually quite negotiable if you use price comparison sites. For instance, if you look at an automobile insurance price comparison website, you might find that there are many different types of ways to lower your car insurance payment each month without giving up any type of service.

Price comparison sites give you an overview of the market

In the example with automobile price comparison websites, accessing information that allows you to see what kind of price and service you can get for your particular driving record from all the reputable companies in your area gives you a powerful advantage. No longer are you subject to the whims of the agents of individual companies that are trying to hard-sell you on their programs without you having the benefit of a side-by-side comparison. Not only can you compare one company to another with the right price comparison site, you can also compare your current company to the market as a whole, giving you the right perspective when it comes to knowing exactly what you can and should be getting for your money.

Price comparison sites give you the lowest price at any given moment in time

In the auto insurance industry, one of the most competitive industries in the world, the lowest price for the best value does not stay at the same company all of the time. As a matter of fact, many independent third-party watchdogs of the automobile insurance industry recommend that you compare your premium payments to what you’d pay competitors at least twice a year, which not so coincidentally coincides with auto insurance periods.

The company that has the best price today might not have the best price tomorrow, and you should not be ashamed to switch in a hurry if someone else has a better deal. This is a way to keep from paying too much for services that you can receive for a lot less.

Price comparison sites keep you doing business with reputable companies

Price is not the only concern when it comes to breaking out of debt. When it comes to insurance, you definitely want to deal only with reputable companies that have policies that actually protect you in case of an emergency. If you do not, you may end up paying much less as a monthly premium, but you will possibly be completely unprotected in the event that something bad happens. For most people, it would take only one emergency to completely destroy their financial plans, which makes finding a reputable insurance company one of the highest priorities for those who are trying to seriously break away from debt.

My name is Nisha Sharma. I represent a site called CompareLogbookLoans.co.uk. I love to write, especially about travel, finance and offer business advice.

The reasons for bankruptcy can be many but it hurts most when it has been forced on you because of some event taking place that is beyond your control. This is why you should take all possible precautions to prevent you finding yourself in a position where you can’t pay back all the debts you owe. Of course the first thing to ensure is that you never borrow more than you can comfortably repay but what would happen if you suddenly lost your means to earn your income through no fault of your own, and your creditors demanded their money? If you didn’t have some backup system at your disposal you would be in trouble and bankruptcy would be hard to avoid, that’s where income protection insurance comes in.

Besides enabling you to keep food on the table while you are unable to work, income protection insurance can also enable you to keep paying your debts and therefore avoid any bankruptcy action being taken against you.

In this day and age many of us tend to live from pay day to pay day and many small businesses are run on the basis of income coming in on a continuous basis. Anything that happens to this income stream can cause concern among creditors and as soon as one takes action to get their money, the others soon follow. Once again adequate income protection will prevent such action being instigated in the first place.

Income protection therefore has an important role to play in our everyday lives. No one can confidently predict our futures as even the best laid out plans can run amok at any time. Those of us with proper income protection policies in place can avoid such a disaster occurring and get to live another day. Income protection insurance can therefore save you from bankruptcy, and should you encounter any of the following financial disasters:

• Suffering from an illness that prevents you from working for a prolonged period of time.
• Redundancy through no fault of your own (as long as this is stipulated in the policy).
• Depression disorder that prevents you from working.
• An accident that has left you injured whereby you can’t continue earning your usual income.
• Temporary unemployment (as long as this is stipulated in your policy).

Any of these occurrences can affect your ability to continue meeting your ongoing financial obligations and eventually lead to bankruptcy if you have failed to adequately protect yourself, either through savings, or through income protection insurance.

Self-employed small business owners can also benefit

If you are a small business owner you will know what could happen to your business if you were not there to keep the work going as usual. In fact statistics have shown that one in three small business operators become unable to work for at least 90 days each year because of an accident or illness. This means the business has to survive for three months with no earnings although the business overheads would remain. There are only two solutions to such a problem:

1. Structure your business so that your presence is not absolutely tied to your business succeeding. This might mean the employment of another person and that might not be financially possible.
2. Taking out a suitable income protection insurance policy that will ensure you get 75 percent of your average taxable income. In doing this you will ensure you are protected from running the risk of bankruptcy while at the same time claim your premium payments as being tax deductible.

Sickness benefits through superannuation are often short lived

Most workers, if not all, are for sickness benefits. This means your pay will be continued for a certain period after you find you can’t continue on the job after becoming ill or injured. This protection is often part of your superannuation but the problem here is that it often doesn’t last for long. In many workplaces the workers are only entitled to two weeks sick pay, after that they are on their own. If you are employed it will pay you to find out how long you will be paid sick pay and if you feel your finances would be insufficient to pay your ongoing living expenses after that time, you should look to taking out income protection insurance that can take over when your sick pay is discontinued.

Check for cover regarding loss of employment

Although some insurers will cover you for compensation should you become temporarily unemployed or even retrenched from your regular job, this is not commonplace. If you are looking for this type of protection you must make certain that the policy you are contemplating taking out makes provision for this type of cover. Policies that do cover you for loss of employment will not pay out if you have been fired from your job because of some illegal or criminal activity.

Before taking out any income protection policy don’t be afraid to ask many questions of exactly what you are covered for and what the circumstances are that would prevent you from getting a payout. It is of no benefit if you pay all your premiums regularly and on time only to find out that you are not covered for a particular event when you come to make a claim.

Kristy Ramirez writes for Life Insurance Finder where she helps people keep their income protected with salary protection insurance.

Financial factors to consider when buying a house after bankruptcy

As mentioned earlier, bankruptcy gives you a fresh lease of life. So, you need to plan well and make the best use of this opportunity to start afresh. The answer to “Can I buy a home after bankruptcy” is “Yes”. However, buying a home should not be at the top of your list really. It is very obvious that you have to first ensure that you have a regular source of income which will allow you to meet your basic needs and also provide some savings for building an emergency fund. If you are still left with money, then you could consider using it towards paying your monthly mortgage installments and accordingly fix a budget for buying a home in bankruptcy.

Another important factor to consider is the type of bankruptcy you were granted. This will determine whether your entire debt was settled right away (as in Chapter 7 bankruptcy) or was your debt reorganized (as in Chapter 13 bankruptcy). In the latter case, you will still have your debt obligations to fulfill… so, you will need to take a call on whether you will be able to take on the additional burden of home loan installments (and more importantly, how will you muster enough money for the down payment). Also note that it is almost impossible to get a loan if your bankruptcy is not fully discharged.

Finally, you need to decide on when exactly you can afford to buy a home after bankruptcy; and what are the financing options available to you for buying a home in bankruptcy.

How to buy a home after bankruptcy? What are the available options?

The obvious option that comes to mind is getting a bank loan. And it will translate into a mortgage loan i.e. a secured loan against the home that you buy. Other secured-loan options could be possible too but in most cases they will not be available to you (a person who has just gone through bankruptcy).

Even for home mortgage loan, you must qualify as per the criteria defined by the bank in order to get the loan. Generally, the banks will consider your home mortgage loan application only after certain period of time (mostly 2 years) has elapsed since your bankruptcy. The bank will make the usual checks (including your credit report) and will additionally look at various factors like – do you have a regular source of income since last 1-2 years, whether you have been paying all your bills on time (and in full) and your credit history for the time period after your bankruptcy.

Another option that you could consider is “Land contracts” or seller financing. In this option, the seller acts as the lender for you. You enter into an agreement with the seller to make a down payment and pay the remaining amounts in installments over a period of time. There are various ways in which land contracts are drafted and it is best (both for the seller and buyer) to seek advice from a real estate lawyer for getting the land contract drafted. Since you will find it tough to qualify for home loans from institutional lenders you might resort to land contracts. Moreover, land contracts generally offer more favorable loan terms and interest rates for the buyer.

In any case, you should seek advice from a seasoned real estate professional/lawyer that deals in such matters as buying home after bankruptcy.

As we come to the far end of 2011, the economists give a retrospective glance at the economy to check where we stand. Though individual bankruptcies are falling, yet that doesn’t speak much about the improving financial behavior of the US consumer, who is still being supported by the record federal stimulus. With the record high unemployment rate, people are suffering from lack of cash and spurring personal credit card debt level. The consumer bankruptcy level plummeted 9% in the first half of the year 2011 as compared to 2010. The American Institute said that roughly 707,000 Americans have declared bankruptcy in 2010 but 2011 saw a declining rate of credit card delinquencies and falling missed payments on loans. Does this suggest that the consumer finance is improving?

The life-saving option for the debtors – Is debt consolidation the ultimate choice?

As the Americans are misusing their credit cards and accumulating debt on their accounts, most of them are desperately looking for some option to give their financial life a fresh new start. When you approach financial consultants, most of them will recommend you to the debt consolidation option as this is perhaps the best way to repay your debts effortlessly and also boost your credit score at the same time. Though the ads and pitches for debt consolidation are everywhere, yet hardly all of them are true to their services. Misinformation prevails in this particular industry and if you have to complete a successful debt consolidation process, you have to stay informed about the exact information of such companies.

Some debt consolidation facts you can’t do without

If you’re up to your eyeballs in debt and you’re still not aware of the actual facts of debt consolidation, then you’re perhaps lagging behind. Don’t believe in all the myths that are usually circulated within the industry as this may lead to a soup. Here are some debt consolidation facts that you can’t do without.

• The teaser rates and the prime rates: Usually lenders advertise various teaser rates for the home equity loans, balance transfer cards and the personal debt consolidation loans but the prime rates are always reserved for those who have exceptionally good credit score and the rates that sound far from being true are offered for a short period of time.
• DMP and credit counseling are not synonyms: A credit counseling agency is more like a teaching institution that preaches debtors to get out of their red through budgeting and personal finance management techniques. A debt management plan is usually one of the many debt relief options that the credit counseling agency chooses to help the debtor get out of debt.
• Consolidating through a program may not be the best choice: Not always it is seen that repaying debt through a debt consolidation program is the best choice for a debtor. Sometimes, a debt consolidation loan with a drastically low rate can also work well with your present financial status.

Is debt consolidation the ultimate panacea for the debtors?

Are you relieved to enroll yourself within a program or by taking out a loan? If answered yes, then you have to probably change your attitude towards money. We all know that changing our bad financial habits are often tough but when it comes to consolidating our debts, taking the plunge without bringing about any noticeable change in personal finance management will become disastrous. Remember that debt consolidation is not just a way to delay the inevitable. You have to manage money and make the timely payments on time so that you can live a debt free life.

If the consumers continue to reduce their spurring debt level by getting help from debt consolidation firms, they can improve the growth of the economy too. While the federal debt level is also ballooning with time, you have to make sure that you don’t keep on raising your personal debt ceiling without any change in the spending floor.

Kavin Matthews is a financial writer with a vast knowledge on financial articles. He contributes his financial write ups to various blogs, communities and websites so that the visitors can go through the content and educate themselves on getting out of debt. Some topics covered by him are debt consolidation myths, effect of debt settlement on your credit score and many more. To know more on various other financial topics, you may visit http://www.ovlg.com/debt-consolidation/

While writing credit repair letters (or credit repair dispute letters) you must ensure that you follow these guidelines:

1. Credit reporting companies are the ones to contact: Since credit reporting companies are the prime source of information for the lenders to judge your credit worthiness, it is important to send your credit repair dispute letters to these credit reporting companies/bureaus. However, this doesn’t mean that you should not send the dispute information to the erring creditors in question. In fact, it is a good practice to send all the dispute information and documents to the creditors as well… it might help speed up the process and the creditors cannot claim that they didn’t receive complete information on the dispute from credit bureaus.

2. Identify the incorrect items in your credit report: You must clearly mark the items that you feel are incorrect in your credit report. You might want to encircle such items in your credit report and assign some sort of reference number to each such item… for easy reference in your credit repair dispute letter. You must then include a copy of your credit report (with the items marked) together with your credit repair letter.

3. Supporting documentation: For each incorrect item, you must mention why it is incorrect and furnish supporting proofs (only copies, NO Originals) towards this. You must also clearly mention what you think should be the correction e.g. correcting amounts/dates or deletion of the item altogether.

Note: You will find sample credit repair letters all over the Internet. Whatever sample credit repair letter you use, you must cover the points mentioned here in order to ensure that your letter is effective.

4. Ensure correct address: This is an error that can cost you a lot. Do not use the address of credit reporting bureau/creditor that you had noted long time back somewhere… get the latest address by calling them up. Also check that the address you get is the one to which the complaints/credit repair letters should be addressed. At the same time, it is also important to ensure that you specify your own address correctly especially if you have recently moved to a new address.

5. Keep a record of all communications: For credit repair dispute letters, it means that you should send them with “return receipt requested” so that you have a record of what was received by the credit reporting company. Similarly, if you have had discussions with them over phone/email etc. then keep a record of such discussions too i.e. date/time, person talked to and a short note of the discussion/conclusion.

6. Send it to all 3 credit bureaus: It would be a good idea to send the dispute letters to all the 3 credit bureaus (Equifax, Experian, and TransUnion) at the same time. This will help you ensure that corrections are reported to and made in all your credit reports.

Note: It is expected that if a disputed item is corrected, the information provider must send the correction to all three credit bureaus. Also, it is expected that the credit bureaus must send the corrected credit report to everyone with whom they have shared your credit report in past six months (or, in case the reports were shared with your prospective employers, in past 2 years).

However, in case you don’t get a resolution, hire a good lawyer… and your communication records/proofs will come in handy to get you a resolution.

But what are the factors that affect your chances of getting a mortgage after bankruptcy?

Firstly, the lenders will check how you have been doing on your bills and other payments (including the loans that were not discharged in bankruptcy) during the period of 2 years (or whatever) after bankruptcy discharge. If you have been making all timely payments, it would also reflect in your credit report and lenders would be ready to consider giving you a mortgage loan.

Secondly, the lenders would want to know how much down payment you are able to make towards your home purchase. Your chances will improve with a higher percentage of down payment that you are ready to make. In fact, you would be expected to anyways make a higher down payment as compared to others who have a better credit history.

Another very important parameter would be your debt-to-income ratio. If your income has fallen or if your debt has increased, your chances of getting a mortgage after bankruptcy would come down. So, do not build more debt after bankruptcy (in any case, you will find it difficult to borrow money post your bankruptcy).

Besides this, the lenders will anyways make the usual checks that they would with any mortgage seeker.

What kind of terms to expect if you get a mortgage after bankruptcy?

Well, you can expect much higher interest rates than what are being offered to the other borrowers who have a better credit history. Similarly, you can expect a lower-than-usual mortgage amount to be approved by the lenders and a much higher down payment requirement from you… all this, besides prepayment penalties and unfavorable mortgage terms.

What can you do to improve the situation and your chances of getting a mortgage loan after bankruptcy?

As mentioned previously, the most important thing is to ensure that your monthly payments are made in time and in full… this will include your bills and debt payments. If you got a secured credit card or an installment loan after bankruptcy, you should make the full use of them in order to improve your credit history by sticking to financial discipline and making all timely payments.

You must also ensure that your credit reports are correct in all respects and do not contain any incorrect entries or items that do not belong to you. If you find any mistakes in your credit report, you should immediately inform the three credit bureaus (Equifax, Experian, and TransUnion) and the creditors about the wrong information and get it corrected immediately.

You should also do a proper financial planning and ensure that all your long term, medium term and short term financial goals/expenses are part of this plan. With such a plan, you will be able to balance your home budget and ensure that you don’t overshoot your budget while trying to meet your financial goals.

Further, you can look for jobs that pay you better than what you get today… or just see if you can get an additional source of income through extra-work etc.

However, as we all know, prevention is better than cure… so, the best thing is to impose financial discipline/planning and avoid bankruptcy.

So, what can you do in order to get credit cards with bankruptcy still on your credit report?

Well, the first thing to do is to take stock of the situation and figure out what went wrong with you i.e. why did you have to file bankruptcy in the past… what were the reasons? In most cases, financial indiscipline is the culprit but in some cases there are genuine reasons e.g. a medical emergency. While there isn’t much that you can do about exigent situations, you can surely learn from your financial mistakes. A better financial planning and discipline can do the trick for you and safeguard you from again getting into a bankruptcy scenario. At the same time you would also need to do something to improve your credit score and credit history.

Getting unsecured credit cards after bankruptcy can be ruled out for a long period of time. So, your best bet would be to get secured credit cards after bankruptcy. The secured credit cards would not only be the best credit cards after bankruptcy but also the only feasible option for getting a credit card after bankruptcy. And a secured credit card can serve many purposes at the same time for you.

Let’s first recall what a secured credit card is…

A secured credit card is a credit card that is issued by a bank or a financial institution against the money deposited by you with them. This means it is not really a credit card in the sense that you are not getting any “real” credit… instead you are just spending money from what you have deposited with the bank or the financial institution who has issued you the credit card. From the issuer’s perspective it is a secure bet because if you do not pay your dues then they can get their money back by using the deposit that they already have with them… and hence the name secured credit card.

Now, coming to the advantages of getting secured credit cards after bankruptcy…

The first advantage is that it will bring in the much needed financial discipline in you and prevent you from spending beyond your means because your credit limit is linked to the amount of money you have deposited with the card-issuing institution/bank. As pointed out before, this financial discipline is the most important preventive measure for anyone who has filed bankruptcy previously.

The second advantage is that you can use this secured credit card to better your credit score. For this, you have to just ensure that you pay your credit card dues on time and in full. As you keep using your credit card and make timely repayments, your credit score will rise and you will be in a better position to get other loans (and even jobs… as many recruiters also consider credit score as part of their selection criteria for employment).

And of course, the secured credit card will provide you the same convenience and safety as any other credit card (against carrying cash). Moreover, you can enforce further financial discipline by looking at your credit card statements and identifying what are the unnecessary expenses that you could still do away with for the next months.

So, go ahead and get your secured credit card… and make the most of it.

Filing business bankruptcy can be an emotionally difficult process for any business owner. However, sometimes things can go wrong for a business either due to wrong decisions or due to external/unforeseen conditions; and in such a situation, filing for business bankruptcy might become the best option (of the available options). Generally, your creditors would be prohibited from collecting their dues from you while your bankruptcy case is on.

Types of business bankruptcy

There are three types of business bankruptcy based on the Chapter under which you file business bankruptcy. Also, the applicability of each type of business bankruptcy depends on the type of business i.e. sole proprietorship, partnership, Limited Liability Company (LLC) or corporation. In case of sole proprietorship, the personal assets of the proprietor might be sold in order to retrieve the money for repayment of the business debt. However, in case of LLCs, corporations and some partnerships, the assets of the business owners are protected since the business is treated as an entity separate from the individual/individuals that own the business.

So, the three types of business bankruptcy (applicable to individuals too) are:

Chapter 7 bankruptcy

Under Chapter 7 (which is applicable primarily to individuals and small businesses i.e. sole proprietorships), the assets of the business and the business owner/proprietor are liquidated in order to make the repayments to the creditors… as per the bankruptcy law. Post this exercise, the business/proprietor is free of debt. Chapter 7 is opted for by business owners when they see no future for the business and decide to give-up rather than fight it out and repay debts.

Chapter 13 bankruptcy

Under Chapter 13 bankruptcy (this too is applicable to individuals and small businesses or sole proprietors), the debt is reorganized in such a way so as to facilitate the repayment over a three to five year period.

Typically, the court will appoint a trustee who will set-up a repayment plan (might ask the debtor to prepare the plan) based on the debt, the income and the assets of the business/proprietor. This plan is then shared with the creditors and edited till there is an agreement achieved between the debtor and creditors. If required, the trustee will intervene to help finalize the repayment plan between two parties.

So, Chapter 13 offers more protection to personal assets (e.g. home) as compared to Chapter 7 bankruptcy.

Chapter 11 bankruptcy

Under Chapter 11 bankruptcy, the business gets more flexibility in terms of repayment period which can extend even up to twenty years or more. However, the business is kept under a very close scrutiny at all times. Like the other two Chapters, Chapter 11 too covers individuals as well. Chapter 11 bankruptcy is quite complex and the processing time is also much more for Chapter 11 Bankruptcy.

Though Chapter 7, 13 and 11 are the most commonly discussed Bankruptcy Chapters, there is another one (Chapter 12) under which fishermen and family farmers can file business bankruptcy.

It is also important to note that there are various eligibility criteria that you must fulfill for each type of bankruptcy and hence it might not totally be your choice. In any case, it would be best for you to consult a bankruptcy attorney to help you out in taking the decision and moving your case forward with ease.

So, what is a means test for bankruptcy?

A bankruptcy means test, simply put, is a test (or shall we say, a calculation) that is done in order to determine whether the debtor (on whom means test for bankruptcy is being done) has the means to repay his debts and to what extent.

The means test for bankruptcy involves comparing your monthly income with the median monthly income of a similar-sized family in your state… and the second part of course is determining how much disposable income you have (if any) after paying for minimal living expenses. That is the premise on which the means test works.

How is this bankruptcy means test conducted?

Well, you don’t have to sit in some examination hall or anything for this test. You just have to provide the requested information in the relevant bankruptcy form. The debtor has to enter information about his/her income and expenses in the form 22A or 22C… as the case may be. Form 22A is for the purpose of Chapter 7 bankruptcy means test and form 22C is for Chapter 13 bankruptcy means test.

It is also important to note that you must use the right data and parameters for completing your 22A or 22C forms. This is primarily the data (besides your income/expense data) that is provided by Internal Revenue Service (IRS) and Census Bureau. Since this kind of data changes over a period of time, you must use the right time period and accordingly get the data/parameters from the website of Department of Justice.

What could be the result of the bankruptcy means test?

Here it is important to first recall that the bankruptcy means test is primarily applied to check the eligibility for Chapter 7 and Chapter 13 bankruptcies. Note that primary difference between Chapter 7 and Chapter 13 bankruptcy is that while Chapter 7 bankruptcy is used to completely settle/eliminate unsecured debts through selling off the assets not protected by law, Chapter 13 is used to reorganize debts over 3-5 years period as per the means of debtor.

So, Chapter 7 is used by people to immediately get rid of their debts completely. However, means test for bankruptcy could find out that the debtor is indeed capable of repaying his or her debts and hence might dismiss the Chapter 7 bankruptcy application and then the debtor might have to resort to Chapter 13 bankruptcy… or file for bankruptcy under one of the other Chapters of bankruptcy as per their eligibility.

Note: What you judge as minimal living expenses might not be considered as minimal by the courts. So, do not depend entirely on your calculations. In fact, it might be a good idea to take legal advice or consult a reputed professional who can guide you with the means test and help you determine which Chapter to file under.