Who Can File Chapter 7 Bankruptcy?

People must qualify for bankruptcy. So, the question is "who can file for Chapter 7 bankruptcy"?

Chapter 7 bankruptcy law is designed encourage or force people who can pay some of their debts into a Chapter 13 payment plan. How does the bankruptcy law do this? The law looks at how much money a debtor makes in two different ways.

The first way is to compare the debtor's monthly income against the median income for a person in the same situation in the same state. The monthly income is actually an average of the immediate past six months income for the debtor. If a debtor is single, then his income is compared to the median income of other single people in his state. If the debtor's income is less that the median of the other people, then he passes the income test and may continue with filing Chapter 7 bankruptcy. If the debtor's income is more than the median of other peoples income, then the law looks at the "means" test.

The second way of looking at a debtor's income is the "means" test. In this test, the debtor takes his monthly income, deducts certain amounts allowed by law for certain expenses. The result is deemed to be the debtor's disposable income. If the debtor's disposable income is less than a certain amount, then the debtor may continue with filing Chapter 7 bankruptcy. If the debtor's disposable income is more than a certain amount, then the debtor cannot file for Chapter 7 bankruptcy, but the debtor may be able to file a Chapter 13 bankruptcy.

As you can see, the income qualification varies state to state, and because it uses recent time frames, the income qualification varies from time to time. If a debtor's monthly income is too much at this time even though the last several months were very low, the debtor can simply wait a month or two and then recalculate the immediate past six months. The debtor may then qualify.

It should be noted that certain people may be able to skip the income qualification For example, disabled veterans whose debts were incurred while they were on active duty may be able to go ahead and file a Chapter 7. Also, people whose debts were incurred in the operation of a business may be able to go ahead and file a Chapter 7 bankruptcy.

In addition to looking at income, the law also looks at whether a person has filed bankruptcy in the past. People who have obtained a discharge of their debts under (a) a Chapter 7 bankruptcy within the past eight years, or (b) a Chapter 13 bankruptcy within the past six years, are not qualified or eligible to file bankruptcy under Chapter 7. Also, anyone who has had a bankruptcy case dismissed within the last 180 days is not qualified.

Finally, a person who has not paid his last year's taxes is not eligible or qualified. After the taxes are paid, the person may then file a Chapter 7 bankruptcy if the person is otherwise qualified.

This is only general information. If you need specific information on who can file for Chapter 7 bankruptcy or if you have any questions of any nature whatsoever, talk with a lawyer licensed in your state.

For more general information, see Bankruptcy . For more detailed information see Chapter 7 Bankruptcy.

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