Filing for Chapter 7 Bankruptcy: Finding Out If You Qualify to File

By Abraham Avotina

The eligibility for a chapter 7 bankruptcy (sometimes written as chapter seven) has to do with rules. You must meet certain criteria to be an eligible candidate. Your annual income cannot exceed a certain amount. If it does, you are required to pass what is known as the "means test." The court will dismiss your application if it believes you are trying to cheat your creditors or if you have filed a previous suit within a specified duration of time.

The rules have changed since new ones were put in place in the year 2005. Before then, the judge in the case had the power to dismiss the chapter 7 bankruptcy if he felt that the debtor had enough disposable income to be able to negotiate a chapter 13 repayment plan. This was up to the discretion of the judge presiding over the case after he carefully reviewed all of the facts of the case.

That has changed and now there are clear-cut criteria that stipulates who is allowed to stay in a chapter 7 situation and who must choose to go with chapter 13 if the decision to file is made. Those individuals whose debts came about primarily from operating a company or disabled veterans who incurred debts while on active duty in the service automatically qualify for chapter seven.

The new rules consider how high your income is. Your current monthly income must be measured against the median income for a family that is the same size of yours in the state where you reside. This income is the average or regular income you have brought in over the six months preceding the time you filed for bankruptcy. If it is determined that your income is less than or equal to the median of others, under the law you can file for chapter 7, as long as you satisfy the other criteria.

If on the other hand, the money you earn is greater than the median, you are required to pass the "mean test" to file for chapter 7. The purpose of this test is to figure out if you possess sufficient disposable income, after deducting your required payments for your debts and various allowable expenses, to repay a percentage of your unsecured debts over a term of five years.

If you have your debts discharged in a chapter 7 bankruptcy within the last eight years, you are not able to receive another discharge under the same act. The same can be said if you were discharged from a chapter 13 in the past six years.

Go online to research this subject before you take this big step in your life. You also may wish to speak with a trustee or a credit counselor to decide if going bankrupt is the right thing for you to do in regards to your present set of financial circumstances.

If you're considering filing for cincinnati bankruptcy, seek the help of qualified professionals such as these: http://www.omdlaw.com.

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