Eligibility to file Chapter 7
Chapter 7 bankruptcy, also known as a straight bankruptcy, can wipe out many types of unsecured debt. However, there are several requirements to be eligible to file a Chapter 7. The most important qualifier for a Chapter 7 is the Means Test. This test determines whether your disposable income is high enough to make partial payments to unsecured creditors. In the Means Test, your average monthly income for the past six months is calculated and must be less than the median income for the same size household in your state. Even if you fail the Means Test, you may still be eligible to file a Chapter 13 bankruptcy, which has many of the same benefits.
There are several other important requirements to be eligible to file a Chapter 7 Bankruptcy:
- You can’t have filed for Chapter 7 bankruptcy in the previous eight years.
- You can’t have filed for Chapter 13 bankruptcy in the previous six years.
- You must complete a credit counseling course within six months of filing.
- Your case may be thrown out by a Judge if it is found that a debtor has willfully defrauded creditors prior to filing. For example, you cannot run up excessive credit card bills shortly before filing.
Eligibility to file Chapter 13
It is generally easier to qualify for a Chapter 13 than a Chapter 7. Several requirements are listed below.
There are several other important requirements to be eligible to file a Chapter 7 Bankruptcy:
- You must have sufficient income to make the monthly debt payments outtlined in your bankruptcy plan.
- Your unsecured debts (such as medical bills and credit cards) must be less than $419,275.
- Secured debts (for example a car note or mortgage) must be less than $1,257,850. These dollar amounts are in effect until April 2022.
- If you attempted to file for Chapter 7 or 13 bankruptcy but your case was tossed out, you must wait 181 days or more before refiling.
- You must provide proof that you filed federal and state income tax returns for the past two years.
- You must complete a credit counseling course within six months of filing.
If you are interested in filing, yet unsure which Chapter works for you, we’re here to help put your mind at ease. Contact Kelley, Lovett, Blakey & Sanders at 1-800-371-4188 or fill out the easy-to-use contact form on our website. Our professionals will be able to analyze your situation and determine which type of bankruptcy best suits your needs.
