Qualifying for a Chapter 7 Bankruptcy

Chapter 7 Bankruptcy, also called liquidation bankruptcy, is the most popular form of bankruptcy available. This is because Chapter 7 is fast, simple, and widely available. For residents of the San Francisco Bay area, Chapter 7 can be a quick way to wipe away large amounts of unsecured debt. However, one of the most important steps in filing for Chapter 7 is to figure out if you qualify. This requires careful scrutiny of your finances, and making a mistake can result in a dismissal of your bankruptcy case.

Who Can File for Chapter 7 Bankruptcy?

Chapter 7 Bankruptcy is available to individuals, married couples, corporations, and partnerships. There are, however, some limitations.

For example, you cannot file for Chapter 7 Bankruptcy if you have obtained a discharge of your debts through Chapter 7 within the last eight years. Likewise, if you have had your debts discharged through Chapter 13 Bankruptcy within the last six years, you are ineligible for Chapter 7.

Sometimes, people file for Chapter 7 but their filing is dismissed by the court. You are not eligible for Chapter 7 Bankruptcy if you have had a Chapter 7 case dismissed within the past 180 days because:

1. You requested your case to be dismissed after a creditor asked the court for relief from the automatic stay; 2. The court ruled that your bankruptcy filing was fraudulent; or 3. You violated a court order.

The Chapter 7 Means Test

In order to file for Chapter 7 Bankruptcy, individuals must pass something called the Chapter 7 means test. The means test is written into the bankruptcy law, and exists to ensure that high-income individuals are not able to take unfair advantage of the benefits of Chapter 7 Bankruptcy. The Chapter 7 means test consists of two steps:

  1. If your “current monthly income” (your average income over the last six calendar months) is less than the median income for a household of your size in your state, you pass the means test and can file for Chapter 7.
  2. If your current monthly income is higher than the median income, the means test determines whether you have sufficient “disposable income” to repay some debts. By subtracting certain necessary expenses from your monthly income, the test calculates your disposable income.

Although the means test is relatively simple for individuals with less than the median income, it is significantly more complex for individuals with higher income. It is important to consult with an attorney who has experience with Chapter 7 cases to ensure that you qualify before filing.

Contact the Law Offices of Melanie Tavare

If you are considering filing for Chapter 7, it is important to be 100 percent sure that you qualify. This is one of the reasons why you should consult with an attorney who has years of experience handling Chapter 7 cases. The Law Offices of Melanie Tavare are proud to serve residents of Alameda County, Oakland, Hayward, and other communities within the San Francisco Bay area. You can contact us online or by calling 510-255-4646 for advice on whether you qualify for Chapter 7 Bankruptcy.

The Law Offices of Melanie Tavare are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.