Can You File Chapter Seven Bankruptcy?
The basic 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. So, do you qualify for ch 7 bankruptcy?
Individual – Only individuals can file a chapter 7 bankruptcy. You can be married or single. You can file with your spouse or without them. Your spouse’s income will have to be considered even if you are not filing together in order to see if you qualify for chapter 7.
Income – Chapter 7 filers must complete a means test that takes your income and expenses into account to determine if you are able to pay a portion of your debt. If your income is beneath the state median for your family size, as established 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 means test will then compare your living expenses to the IRS standard allowances that have been set for where you live. If you have other expenses that are needed to live such as special medical needs, these can also be included to lower your disposable income.
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 your leftover income is between $6000-$10,000 then you have to determine if you can pay at least 25% of your unsecured debt, if you can’t then you can file ch7. 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 bankruptcy information for chapter 7 and 13, and DoItYourselfBankruptcyForms.com where you can find free bankruptcy forms online.
