Filing for protection under Chapter 7 of the U.S. Bankruptcy Code can provide financial relief to people who are faced with unmanageable debt. However, before you can file for Chapter 7 bankruptcy, you will need to qualify. If you do not qualify for Chapter 7 bankruptcy, relief might be available to you under a different type of bankruptcy.
The means test
To file for Chapter 7 bankruptcy, people must meet the means test. This test compares your income to the median income where you live for your family’s size. If your income is greater than the median income, you might not qualify for Chapter 7 bankruptcy. However, you might qualify to file for Chapter 13 bankruptcy.
Enough time has passed since a previous bankruptcy discharge
Under bankruptcy law, people are only allowed to file a second or subsequent bankruptcy petition if enough time has passed since their previous discharges. If you previously received a discharge in a Chapter 7 bankruptcy case, you must wait for at least eight years before you can file another Chapter 7 petition. If you previously received a discharge in a Chapter 13 bankruptcy case, you will need to wait for six years before you can file a Chapter 7 petition. The period runs from the date when your previous bankruptcy petition was filed rather than from the date your debts were discharged. You also cannot file for bankruptcy if a previous case was dismissed within the last 180 days because of fraud, because your creditors asked for the automatic stay to be lifted or because you violated the court’s order.
Credit counseling requirement
Before you can file a petition for Chapter 7 bankruptcy, you must complete a pre-filing credit counseling session. These are available through approved credit counseling agencies over the phone, in person and online. Once you complete the credit counseling course, you will be given a certificate. Save this certificate because it must be filed with your Chapter 7 bankruptcy petition.
Chapter 7 bankruptcy can provide financial relief to people who are overwhelmed by unsecured debts. People who are unsure whether they qualify for Chapter 7 bankruptcy might want to talk to a bankruptcy attorney to learn about their options.