Qualifying for Chapter Seven Bankruptcy
The first question clients usually ask is if they are eligible to file a chapter 7 bankruptcy. Bankruptcy courts and laws can be confusing to someone who hasn’t been through the process, especially discovering eligibility thanks to the new bankruptcy laws. Let’s look at who can file a chapter 7 bankruptcy?
Individual – Only individuals can file a chapter 7 bankruptcy. You can be single or married. If you are married you may file with or without your spouse. If you file without your spouse you will still have to disclose their income in order to determine if you are eligible to file chapter 7.
Income – The chapter 7 means test will see if you have expendable income available to pay some or all of your debts. Your income is compared to the state median for a family of your size, if it’s below the median then you qualify for chapter 7.
You can still qualify for chapter 7 if your income is higher than the median in your state by showing your living expenses. The IRS has furnished 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.
If you are left with over $10,000 in disposable income you cannot file a chapter 7 bankruptcy, but if it’s less than $6000 you qualify. 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. As you can see, the means test is confusing if you have disposable income because your income is higher than the median, so you should discuss your eligibility with a bankruptcy attorney.
Guest Article Provided By: BankruptcyFormProcessing.com where you can find chapter 7 bankruptcy information, and DoItYourselfBankruptcyForms.com where you can find free bankruptcy forms online.
