top of page
  • Writer's pictureRedd Law, PLC

Qualifying for a Chapter 7

Most of my clients want to file a Chapter 7 bankruptcy. After all, the complete debt relief that a Chapter 7 can provide seems more desirable than the payment plan that a Chapter 13 provides. However, the new bankruptcy law enacted in 2005 requires a means test which involves an analysis of a debtor’s income for 6 months. This income is compared to the median income for the state. A debtor’s income is analyzed based on the number of people in the household. If the income is lower than the median income, then it is presumed that the debtor qualifies for a Chapter 7 although the court will still look at whether it appears that there is extra income available to pay creditors.

Even with income higher than the median, debtors may still be able to file a Chapter 7 bankruptcy. If a debtor no longer earns the higher income due to a job loss or reduced income, then an affidavit can be filed with the court showing that the means test shouldn’t apply. Also, the means test provides additional calculations for higher income debtors to see if they can qualify for a Chapter 7. That’s why it’s important to see an attorney about qualifying for a Chapter 7. There may be ways for a debtor to qualify for a Chapter 7 bankruptcy now or in the future with accurate analysis and planning.

1 view0 comments

Recent Posts

See All

Determining Property Values in Bankruptcy

Everyone who files bankruptcy must disclose all of their real and personal property. The value of real estate can be easily done with an appraisal or market analysis. For cars, debtors can look at t

Is Bankruptcy Necessary when You’re Uncollectible?

When a creditor gets a judgment against a debtor, the creditor can attempt to collect the money owed by doing things like garnishing wages, bank accounts or state tax refunds. However, there are some

Chapter 7 Bankruptcy for Small Businesses

Corporations, limited liability companies, and partnerships are allowed to file a chapter 7 bankruptcy petition. Like individuals, business entities receive protection from creditors in bankruptcy.


bottom of page