Over 250,000 Americans file for Chapter 7 bankruptcy annually. If you believe this approach to dealing with debt is the right option, speak with a Chapter 7 bankruptcy lawyer.
Before following this path, understand that not everyone will qualify to file for this type of bankruptcy. You must meet certain requirements to be eligible to file Chapter 7 bankruptcy.
Chapter 7 bankruptcy requires you to pass the means test, complete credit counseling, and attend a meeting with creditors overseen by the trustee in your case.
Having No Recent Bankruptcy Filings
Have you filed for Chapter 7 bankruptcy within the last eight years? If so, you cannot file for Chapter 7 bankruptcy again. You will need to wait until it has been at least eight years since you last filed for bankruptcy to go back through the process. It is important to note that the eight years starts from the filing date of the previous bankruptcy, not when the prior bankruptcy was completed.
Additionally, you can’t have any Chapter 7 case dismissed with a bar to refiling.
You won’t meet the necessary Chapter 7 bankruptcy requirements if you’ve had a bankruptcy case dismissed due to:
- Fraud
- Abuse
- Violating a court order
Holding Dischargeable Debts
Filing for Chapter 7 bankruptcy will enable you to discharge some unsecured debts when your petition is successful.
Examples of dischargeable debts include:
- Credit card debt
- Medical debt
- Personal loan debt
- Business debt
However, you cannot discharge all debts by filing for Chapter 7 bankruptcy.
Some common non-dischargeable debts are:
- Restitution Orders
- Alimony and child support debts
- Fraudulent debts
Other debts may be dischargeable if certain criteria are met.
These include:
- Tax debts
- Student loan debts
If the majority of your debts are non-dischargeable, it may not make sense for you to file for Chapter 7 bankruptcy.
Passing the Means Test
Debt will typically suffocate your finances and make you feel like there isn’t any way to pay it down. Unfortunately, you can’t simply claim that you can’t repay your debts — you will also need to prove it by passing the means test if your income is above the median for the state and family size where you are located..
The means test looks at your income over the last six months and imposes certain limits on your expenses based upon family size. Passing the means tet requires that your expenses exceed your income. You can be a high earner and pass the means test as it favors those who have home loans and car payments.
Passing the means test is another one of the non-negotiable Chapter 7 bankruptcy requirements. If you don’t pass the means test, your case is presumed to be abusive. If you cannot rebut the presumption, your case could be dismissed or converted to a repayment chapter..
Completing Pre-Bankruptcy Credit Counseling
Within six months before filing for Chapter 7 bankruptcy, you must sign up for pre-bankruptcy credit counseling and complete the course. This will ensure that you understand how bankruptcy works and how it will affect your credit and financial situation as a whole.
The U.S. Justice Department has compiled a list of approved credit counseling agencies. Make sure you choose one of these agencies to avoid taking another course later because you picked an agency the DOJ doesn’t recognize.
Hiring a Bankruptcy Attorney and Filing a Petition
If you meet all the Chapter 7 bankruptcy requirements thus far, then declaring bankruptcy may be an option for you. To begin, you will want a trusted Chapter 7 bankruptcy attorney to assist you through this process.
Technically, you can file for Chapter 7 bankruptcy without an attorney, as hiring a lawyer isn’t one of the requirements. However, doing so will present complications in many cases and be downright confusing if you don’t know understand the nuances of the law.
A Chapter 7 bankruptcy attorney will offer assistance as you file a petition with a bankruptcy court. They will file the proper paperwork for you, including tax returns and other key documents, so you don’t face unnecessary delays.
Upon filing your bankruptcy, you will receive an automatic stay, which acts as an injunction against your creditors. It stops them from attempting to collect payments from you. It will also prevent them from foreclosing on your home or repossessing property.
Attending a 341(a) Meeting of Creditors with a Bankruptcy Trustee
In every Chapter 7 bankruptcy, the bankruptcy court will also appoint a Chapter 7 trustee to oversee your estate. One of their first orders of business will be scheduling a 341(a) meeting of creditors.
You will attend this meeting with your Chapter 7 bankruptcy attorney and creditors. During it, the trustee will place you under oath and ask questions about your debt and finances. Your answers will help determine if you meet the Chapter 7 bankruptcy requirements.
Selling Nonexempt Assets to Repay Creditors
If a trustee determines that you qualify for Chapter 7 bankruptcy, their next order of business will be selling any nonexempt assets to repay creditors. You may keep some assets, if the debt against the asset exceeds its value and/or it can be protected under applicable laws.
Taking a Debtor Education Course and Having Eligible Debts Dismissed
If you reach this point, you will need to take a debtor education course before requesting to discharge your remaining debt.
Just like with the previously mentioned pre-bankruptcy credit counseling, you must take a course approved by the U.S. Justice Department. This will put you in a position to have eligible debts discharged.
Contact Us to Discuss the Chapter 7 Bankruptcy Requirements
Not everyone who files for bankruptcy meets the necessary Chapter 7 bankruptcy requirements. If you aren’t sure whether you will qualify to file for this type of bankruptcy, Janus Law is here to help. We will assist you with every aspect of filing for Chapter 7 bankruptcy and will guide you to a new financial beginning.
Call us at (818) 672-1778 now to speak with a dedicated, experienced, compassionate bankruptcy attorney about your case.
- Eligibility Requirements for Chapter 7 Bankruptcy Explained - January 29, 2025
- Understanding the Chapter 7 Asset Liquidation Process - January 24, 2025
- Chapter 7 vs. Chapter 13 Bankruptcy: The Main Differences - December 27, 2024
Schedule An Appointment
Talk to a Bankruptcy Attorney Right Now
Call Now to Schedule An Appointment
Other Tips
Understanding the Chapter 7 Asset Liquidation Process
Chapter 7 vs. Chapter 13 Bankruptcy: The Main Differences
