Filing for bankruptcy can be an intimidating proposition, especially when you don’t have a high income. Eligibility for Chapter 7 bankruptcy is assessed through the means test, and uses your amount of disposable income to qualify.
Using the Means Test: There are several ways that your ‘means’, or amount of disposable income can be tested to see if you qualify for Chapter 7 Bankruptcy. One of the first steps involves calculating your disposable income, and seeing where it falls on the income levels for your state.
- If your income is less than the medium income for your state, you qualify for Chapter 7 Bankruptcy, and have passed the means test.
- If your income is more than the medium for your state, you may still be able to qualify for Chapter 7 after paying off a portion of your debts, including credit card bills.
- If you weren’t able to pass the means test, but do still have extensive debts, another viable option is filing for Chapter 13 bankruptcy, which does require making monthly payments for three to five years while your budget is being monitored by the court.
If you pass the means test, there are still several situations that would disqualify you from filing for Chapter 7 Bankruptcy. If you had previously filed for either Chapter 7 or 13 bankruptcy in the past 6 months, and were dismissed for reasons of court order violations, or because of a fraudulent or abusive filing, you will not be able to file for Chapter 7 Bankruptcy.
Additionally, you will not be able to file if you have dismissed a previous bankruptcy case in the past 180 days “after a creditor asked for relief from an automatic stay.” Finally, if you have received a discharge of your debts under Chapter 7 in the past eight years or by Chapter 13 in the past six years, you will also not be eligible to file for Chapter 7 Bankruptcy.
Your case can also be dismissed if the court believes that you have attempted to misrepresent or conceal your assets to cheat your creditors. This includes giving substantial assets to friends or relatives, charging exorbitant debts when you knew you would not be able to repay them, keeping property or money out of knowledge of your spouse during a divorce, or lying about your assets and debts on a credit application. In filing your bankruptcy papers, you will be doing so under penalty of perjury; if you sign on false information, not only will your case be thrown out, but you may also be prosecuted for fraud.
If you are facing bankruptcy, whether Chapter 7 or Chapter 13, you will need an experience attorney to guide your way during the process. Contact me, John L. Schettino for a free phone consultation about your options, how best to file, and which chapter proceeding is right for you. Our offices can be reached by phone at (201) 498-9768.