Chapter 7 Bankruptcy Qualifications

Even in good economies there are some people who, for a variety of reasons, will not be able to pay their debts. U.S. laws provide for those debtors to get some relief by filing for bankruptcy. You are allowed to file for Chapter 7 bankruptcy only if you meet stringent qualification criteria.

Chapter 7 Bankruptcy

Chapter 7 bankruptcy allows you to completely discharge your debt without being required to pay it back. The other option available to individuals, Chapter 13, requires you to make payments on your debt.

Previous Bankruptcy

In order to file for Chapter 7 bankruptcy, you cannot have previously filed for bankruptcy in the last eight years.

Median Income

Your current monthly income must be equal to or below the median income for a family of your size in your state. If your income is higher than the median you will not be able to file for Chapter 7 unless you pass the means test.

Means Test

If your income is too high, you may still be able to file for Chapter 7 if you can pass the means test. After subtracting certain allowable expenses from your monthly income, the court will determine if you have enough disposable income to repay at least some of your debt. If you can, you are not allowed to file for Chapter 7.

Chapter 13

If you do not meet the requirements to file for Chapter 7, you may still file for Chapter 13 bankruptcy. Under Chapter 13 the court structures a payment plan that you must follow in order pay some or all of your debt.

References

• Nolo.com
• USCourts.gov