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 modified who is eligible to file personal bankruptcy to keep people from taking advantage of the system. Let’s look at who can file a chapter 7 bankruptcy?
Individual – Only individuals can file a chapter 7 bankruptcy. You can be married or single. If you are married you may file with or without your spouse. 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 checks if you have the means, enough liquid income, to pay at least a portion of your debts. You are eligible for a chapter 7 if your income is lower than the state median for a family of your size.
You can still qualify for chapter 7 if your income is higher than the median in your state by showing your living expenses. The means test will then compare your living expenses to the IRS standard allowances that have been set for where you live. Extraordinary expenses can also be included such as medical needs or special diets for health issues.
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 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.
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.
