How do I know if I qualify for Chapter 7 bankruptcy?

On Behalf of | Aug 25, 2023 | Bankruptcy, Chapter 7 |

Filing a Chapter 7 bankruptcy petition in Florida can help you manage overwhelming debt, but you must meet specific qualifications. The following points will help you understand who can qualify and a few issues that might disqualify you from a successful filing.

The means test

You must pass a two-part test to qualify for Chapter 7 bankruptcy. The first part of the test measures your income against the monthly median income for your state. If the average of your past six months of income is higher than your state’s median, you must complete the second part of the means test. After deducting certain allowable expenses from your income, if you do not have enough remaining disposable income to pay off your creditors, you may qualify for a Chapter 7 filing.

Additional requirements

Although filing and completing a Chapter 7 bankruptcy is relatively quick, you must complete a few other steps to qualify. Within 180 days before you file, you must complete a credit counseling course by a nonprofit agency approved by the U.S. Trustee’s Office. This step helps you assess whether you have any other viable options before filing for bankruptcy.

You may be able to secure an exception from this part of the process if you have a mental incapacity or physical disability or your bankruptcy is due to debt acquired while you were on active military duty in a war zone.

Prior filings

You may encounter problems qualifying for bankruptcy if you have recently discharged debts through a previous filing. To be eligible for Chapter 7, you must not have completed the same type of bankruptcy within the past eight years. If you have a previously completed Chapter 13 bankruptcy, you must wait six years before you can qualify to file for Chapter 7.

Important disqualifiers

You will not be able to qualify for Chapter 7 if you had a previous bankruptcy petition for either Chapter 7 or 13 dismissed within the past 180 days for certain reasons. These reasons include violations such as not appearing in court or violating court orders. Another disqualifier is voluntarily dismissing the bankruptcy if creditors attempt to seek a court judgment against you. If you previously filed Chapter 7 and your case was considered fraudulent or abused court time, you will also be disqualified.

Additionally, the court can discharge your bankruptcy case if it determines that you tried to defraud your creditors. Examples of fraud include providing false information on your filing documents, attempting to hide assets by transferring them to others, destroying property or making large, expensive purchases right before filing.

Bankruptcy can offer a financial life raft under challenging situations. Understanding its parameters lets you judge whether Chapter 7 is right for you.