Qualifying for Chapter 7 bankruptcy is something you should discuss with an attorney. But there is a basic set of guidelines of which you should be aware.
What is Chapter 7 bankruptcy? Chapter 7 is the most common type of bankruptcy; the name refers to a chapter of the U.S. Bankruptcy law. Under a Chapter 7 bankruptcy, some of a debtor’s property may be liquidated, or sold, to pay creditors. But the debtor’s property is not always sold, such as in a “no asset” case, where the debtor does not have enough property to sell to satisfy any creditors. If all goes well, the end result of a Chapter 7 bankruptcy should be a discharge of the debtor’s personal liability from debts previously owed.
Who may file for a Chapter 7? Individuals or businesses.
Are there income limits? If your current monthly income is more than the median income for your state, you must do a means test to see if you qualify to file for a Chapter 7. If you need to complete the means test, you should get a lawyer, because it can be complicated.
What if I’ve filed for bankruptcy in the past? Again, there are some complex rules here and you need to speak with a bankruptcy attorney. You might need to wait a certain period of time, depending on what happened as a result of your last filing and what chapter you filed under, before you can file again.
What about the credit counseling requirement? You are required to take a credit counseling course before filing. At the end of the course, you receive a certificate that you provide at the time of filing. The certificate expires after 180 days. The course you take must be given by a provider that has been pre-approved by the bankruptcy court.
These are only some bare-bones basics about Chapter 7 eligibility. There are situations where filing for bankruptcy under a different chapter (such as Chapter 13) might be the better course of action for a debtor. You should consult an attorney first to find out which is best for you.