Chapter 7 Bankruptcy Eligibility
New Bankruptcy Rules: Are You Eligible To File For Chapter 7 Bankruptcy Protection
Any person who wants to file for a Chapter 7 bankruptcy must qualify for it by meeting several criteria.
1 – The household income cannot be more than a pre-determined
amount.
2 – A means test must be passed.
3 – Court dismissal of case if there is a previous bankruptcy or if the
court has reason to believe creditors are being cheated.
Of course, there will be instances of when you won’t be eligible to file for the Chapter 7 bankruptcy.
Why You Could Be Ineligible To File For A Chapter 7 Bankruptcy
You Have Money To Pay Back Your Debts - With the previous bankruptcy laws, the judge had the right to dismiss any Chapter 7 bankruptcy case if he/she believed the debtor has more than enough disposable income to do a Chapter 13 repayment plan. A judge can dismiss any case for any reason. It all depends on the judge’s attitude and the facts of the case.
With new bankruptcy laws in effect, there is no mistaking who is eligible and ineligible for Chapter 7 bankruptcy. Thus, some folks will be forced to do a Chapter 13 bankruptcy if they wish to file for bankruptcy protection.
Persons eligible for Chapter 7 bankruptcy include:
- Disabled veterans with debts that occurred during activity
duty
- People with debts that came from a business operation
Anybody else will need to meet the requirements listed below.
1 – How High Is The Income Level
According to new rules, the first thing to figure out is whether or not you can file to get a Chapter 7 bankruptcy. This is done by looking at the “present-day monthly income” and seeing how it measures up against the median income for the family size in the state you reside in. The “present-day monthly income” is the average income for the last six months before you have filed for bankruptcy protection. If it’s less than or equal to your median, you’ll be eligible for Chapter 7 bankruptcy.
Should your income be more than that median, you’ll need to take and pass a “means test”, which is a new Chapter 7 bankruptcy requirement for persons looking to file for the protection.
Do you really have enough disposable income to pay back your debts? That is why a means test is used; to determine if you’ve got enough disposable income after certain expenses allowed and debt payments required are subtracted to pay back some of the debt over a period of five years.
2 – There’s Already a Bankruptcy Discharge
You will not be eligible for a Chapter 7 bankruptcy if you’ve already done a Chapter 7 bankruptcy in the last eight years; Chapter 13 bankruptcy will not be granted if one is filed in the last six years.
3 – Previous Bankruptcy Has Been Dismissed In Last 180 Days
You are ineligible to file for Chapter 7 bankruptcy if either a previous Chapter 7 or 13 case has been dismissed in the last 180 days for one of two reasons:
- A court order ruling that the filing was either fraudulent
or abuse is violated.
- You’ve asked to dismiss the case after a creditors has sought relief
from automatic stay.
For more legal related resources, go to Legal Forms site, browse and download many legal forms for free, including Finance Forms and Bankruptcy Forms that you can use when you consider filing bankruptcy at the court.