Qualifying for Chapter Seven Bankruptcy
The basic question clients usually ask is if they are eligible to file a chapter 7 bankruptcy. While the bankruptcy laws are thought to be accessible to everyone, they can be perplexing, and the recent bankruptcy laws have changed how courts determine if someone is entitled to file for ch 7 and ch 13 bankruptcy. Let’s look at who can file a chapter 7 bankruptcy?
Individual - In order to file ch 7, you have to be an individual, businesses are not eligible. You can be single or married. You can file with your spouse or without them. 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 - Under the new bankruptcy laws chapter 7 filers must fill out a bankruptcy means test which determines if you have the means, enough spendable income, to pay at least a portion of your debts. You are eligible for a chapter 7 if your income is under the state median for a family of your size.
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 allowed for standard allowances for things like housing, groceries, and other necessary expenses. Extraordinary expenses can also be included such as medical needs or special diets for health issues.
You can file ch 7 if you have less than $6000 in disposable income, but if you have over $10,000 you cannot file and may be forced into a chapter 13 if you try. 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. As you can see, the means test is confusing if you have disposable income because your income is higher than the median, so you should discuss your eligibility with a bankruptcy attorney.
Guest Article Provided By: BankruptcyFormProcessing.com where you can find information on filing bankruptcy, and DoItYourselfBankruptcyForms.com where you can find free bankruptcy forms online.
