Law Offices of David V. Luu logo

What Kinds Of People Typically File For Bankruptcy?

Bankruptcy does not discriminate. Everyone is only one crisis away from needing to file for bankruptcy, because it affects people who are young, middle-aged, older; it could be anyone from any walk of life. Someone might need to file bankruptcy due to a medical reason, loss of a job, or they might be going through a divorce. There really isn’t one set of people who could seek bankruptcy protection.

Do Different Types Of People Handle It Differently, And Are Their Reasons Different?

It often comes down to medical reasons for older people, because they have significant medical bills at their age. If they had not already planned for retirement or for expenses, that could come up when they get older, which is often the reason seniors file for bankruptcy. With younger people, it often comes down to a “Spend now, worry about it later” mentality, which sometimes gets them into trouble.

Are People Ashamed When They Come See An Attorney Or Are They Resolute About Doing This?

It is a little bit of both. Some people are very hesitant to file for bankruptcy because of their culture or because of their religion, so they might have some reservations. Other times, people might have pressing needs or they just needed a fresh start. These people generally have less difficulty with going through the bankruptcy process.

What Reasons Do People Give for Deciding To File?

People come in and tell me different reasons why they are looking to file for bankruptcy. Sometimes, it is because they have a creditor who has a judgment against them, so they would be trying to prevent their wages from being garnished or their bank account from being levied. Other times, it would be because they were facing a pending foreclosure. They wanted to stop the foreclosure process and were looking for a way to protect their home.

What Factors Govern The Decision Or The Eligibility To File Either 7 Or 13?

It used to be that anyone could file a chapter 7 bankruptcy regardless of what their income was, although things have changed since 2005 with the bankruptcy format. Someone who was above the median income, as determined by the Census Bureau, would not be eligible to file for a chapter 7. This is determined by looking at the person’s household income over the span of 6 months, taking the average of that, and then multiplying that by 12 to compare that number with the median income for a particular state, depending on number of people in the household.

Someone who was above the median would be disqualified and there would be a presumption of bankruptcy abuse. The person would need to go through the Means Test, which is the test that someone would have to go through in order to determine eligibility.

For more information on Who Files For Bankruptcy, a free initial consultation is your next best step. Get the information and legal answers you’re seeking by calling (714) 697-8600 today.

In The Media
David V. Luu Bankruptcy Book

California Bankruptcy Blueprint

(Comprehensive Guide To All Aspects Of Bankruptcy In California)

Free Download

Office Locations

930 W. 17th Street
Suite B
Santa Ana, CA 92706
Tel: (714) 697-8600