06.30.09
Do You Qualify for Chapter Seven Bankruptcy?
The basic question clients usually ask is if they are eligible to file a chapter 7 bankruptcy. The new bankruptcy laws have altered who is eligible to file personal bankruptcy to keep people from taking advantage of the system. Let’s look at who can file a chapter 7 bankruptcy?
Individual - Only individuals can file a chapter 7 bankruptcy. You can be married or single. You can file with your spouse or without them. If you are married and filing alone you will have to include your spouse’s income to be considered for your eligibility to file.
Income - Under the new bankruptcy laws chapter 7 filers must complete a bankruptcy means test which determines if you have the means, enough disposable income, to pay at least a portion of your debts. If your income is below the state median for your family size, as set by the bankruptcy guidelines then you are eligible for ch 7.
If your income is above the median you may still qualify for ch 7 by providing supplemental information on your expenses to determine your disposable income. Your living expenses will then be equated to standard allowances the IRS has ordered for housing, groceries and other normal expenses. If you have other expenses that are necessary to live such as special medical needs, these can also be included to lower your disposable income.
You can file ch 7 if you have less than $6000 in disposable income, but if you have over $10,000 you cannot file and may be forced into a chapter 13 if you try. If your income is inbetween those limits and you can’t afford to pay at least 25% of your total unsecured debt, then you can file chapter 7, but if you can afford to pay it, then you do not qualify. 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 personal bankruptcy information, and DoItYourselfBankruptcyForms.com where you can find free bankruptcy forms online.
