Can I File Chapter 7 Bankruptcy?
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The question we hear the most from people is “do I qualify for chapter 7 bankruptcy?” While the bankruptcy laws are supposed to be accessible to everyone, they can be confusing, and the new bankruptcy laws have changed how courts determine if someone is eligible to file for ch 7 and ch 13 bankruptcy. So, do you qualify for ch 7 bankruptcy?
Individual – You must be an individual to file ch 7. You can be single or married. You can file with your spouse or without them. If you file without your spouse you will still have to disclose their income in order to determine if you are eligible to file chapter 7.
Income – Under the new bankruptcy laws chapter 7 filers must complete a bankruptcy means test which determines if you have the means, enough disposable income, to pay at least a portion of your debts. If your income is below the state median for your family size, as determined 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 additional information on your expenses to determine your disposable income. The IRS has provided standard allowances for things like housing, groceries, and other necessary expenses. You may also be able to include extraordinary expenses you may have due to medical and other conditions that will have to be explained to the bankruptcy court.
If your disposable income is less than $6000 you qualify for ch 7, if it’s more than $10,000 you do not qualify for chapter 7 bankruptcy. If it’s between $6000-10,000 and you can pay at least 25% of your unsecured debt then you do not qualify for ch 7, if you cannot pay at least 25% then you can file chapter 7 bankruptcy. The new means test can be complicated if you make more than the median income, so it’s important to consult a bankruptcy attorney.
