How to qualify for Chapter 7 bankruptcy

On Behalf of | Oct 19, 2020 | Chapter 7

It can be hard to stay on top of your finances, especially when you have recently lost your job or your income has become unstable. Sometimes, outgoings can seem like a leaking tap that just can’t be turned off, while income is hard to come by. If you have found yourself with debts that are quickly accumulating, it may be time to consider taking action so that you can get rid of this financial burden for yourself and your family.

Chapter 7 bankruptcy can be a great option for those with a low or unstable income. It’s also ideal for those who have a relatively low amount of assets. This is because Chapter 7 bankruptcy involves the process of selling assets to pay off the debts that you have acquired. There are always basic assets that you can keep, for example, a car of a certain value and personal items.

The great thing about Chapter 7 bankruptcy is that if your assets are not enough to pay off your debts, you’ll likely benefit from a debt discharge, meaning that you’ll be welcomed into a debt-free life. While Chapter 7 bankruptcy is a great option for many debtors, you need to satisfy the following conditions to qualify.

Passing the means test

If you earn too much, you may not qualify for Chapter 7 bankruptcy. You must take a means test, which will assess your income, assets and expenses before you are able to file.

No recent history of bankruptcy

You cannot have filed a bankruptcy petition in the previous 180 days that was dismissed. Additionally, you cannot have completed a Chapter 7 bankruptcy in the past eight years or a Chapter 13 bankruptcy in the past six years.

Completed credit counseling

Within 180 days before filing, you must have completed pre-file bankruptcy credit counseling.

If you are struggling in your financial situation, exploring your bankruptcy options could be a step toward a brighter future for yourself and your family.