What is the Criteria for Claiming Chapter 7 Bankruptcy?

Understanding the criteria for claiming Chapter 7 bankruptcy.

When the times get really tough and you are having trouble paying your bills, one last resort you have is filing for Chapter 7, but you will only be approved if you meet the criteria.

Determining Eligibility

If your current monthly income is lower than your state's median income, then you qualify for filing Chapter 7 bankruptcy. If not, then your eligibility depends on passing a means test.

Means Test

The means test uses information related to your income and assets to determine if your disposable income is sufficient for repaying your debt.

Dischargeable Debts

You can include credit card debt, medical bills, personal loans, auto loans and mortgage loans. You cannot generally discharge student loans or government debt through bankruptcy.

Restrictions

You cannot file if you've had a previous Chapter 7 discharge in the past eight years, or if you've had a Chapter 7 filing dismissed in the past 180 days.

Additional Requirements

As part of your filing, you are required to attend credit counseling from a certified agency.

References

• Chapter 7 Bankruptcy Basics
• FTC Consumer Information on Bankruptcy