Qualifying for Chapter Seven Bankruptcy

The first question clients usually ask is if they are eligible to file a chapter 7 bankruptcy. The new bankruptcy laws have changed who is eligible to file personal bankruptcy to prevent people from taking advantage of the system. Let’s look at who can file a chapter 7 bankruptcy?

Individual - You must be an individual to file ch 7. You can be single or married. You do not have to file with your spouse if you are married. If you are married and filing alone you will have to include your spouse’s income to be considered for your eligibility to file.

Income - The chapter 7 means test will check if you have disposable income accessible to pay some or all of your debts. If your income is below the state median for your family size, as set by the bankruptcy guidelines then you are eligible for ch 7.

If your income is above the median you may still qualify for ch 7 by providing supplemental information on your expenses to determine your disposable income. The IRS has provided standard allowances for things like housing, groceries, and other necessary expenses. If you have other expenses that are necessary to live such as special medical needs, these can also be included to lower your disposable income.

If you are left with over $10,000 in disposable income you cannot file a chapter 7 bankruptcy, but if it’s less than $6000 you qualify. If your income is inbetween those limits and you can’t afford to pay at least 25% of your total unsecured debt, then you can file chapter 7, but if you can afford to pay it, then you do not qualify. You should talk about your options with an attorney if you make more than the median income as the means test is confusing.

Guest Article Provided By: BankruptcyFormProcessing.com where you can find chapter 7 bankruptcy information, and DoItYourselfBankruptcyForms.com where you can find free bankruptcy forms online.