Chapter 7 bankruptcy can be a valuable resource for consumers struggling with debt and looking for options and protections to help. There are several requirements that must be met to qualify for Chapter 7 bankruptcy the filing parties should be familiar with.
How to qualify for Chapter 7 bankruptcy
There is a test to determine if a party seeking to qualify for and file for Chapter 7 bankruptcy is eligible. The means test is used to determine eligibility for Chapter 7 bankruptcy and looks at factors including:
- The filing parity’s average monthly income for six months before filing for bankruptcy; and
- The median family income in the state where the filing party is filing for bankruptcy.
If the filing party’s income is less than the median income for the filing party’s state, they may qualify to file for Chapter 7 bankruptcy in their state. If the filing party earns more than the state’s median income, a second step of the means test is conducted to determine if the filing party has the disposable income available to repay some of their debts and then should consider filing for Chapter 13 bankruptcy instead.
Make informed decisions
Chapter 7 bankruptcy is a process of liquidation of the filing party’s assets so the proceeds can be used to repay the filing party’s creditors. This does not include property and assets that qualify as a Chapter 7 bankruptcy exemption. Knowing how to qualify for that process to enjoy debt relief is important and can be helpful for consumers dealing with the unwanted stress of living with debt.