» Qualifying for Chapter Seven Bankruptcy

Qualifying for Chapter Seven Bankruptcy July 6, 2009

Posted in : Economy + Finance, Getting Credit , trackback

The basic question clients usually ask is if they are eligible to file a chapter 7 bankruptcy. The new bankruptcy laws have altered who is eligible to file personal bankruptcy to keep people from taking advantage of the system. So, do you qualify for ch 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 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 see if you have expendable income available to pay some or all 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 allowed for standard allowances for things like housing, groceries, and other necessary expenses. 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.

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. 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 personal bankruptcy information, and DoItYourselfBankruptcyForms.com where you can find free bankruptcy forms online.

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