When your debt is overwhelming and you are drowning under your bills, it’s essential to find a solution as getting out of debt will benefit both your well-being and your financial future. One option is to file for Chapter 7 bankruptcy. This can be a great solution if you are unable to pay off your debts.

There are certain requirements you must meet to file this type of bankruptcy, including proving your income is below a certain level and you are unable to repay all of your debts.

Your income is below a certain level

You will need to complete a “means test” to prove your income falls under a certain level. To do this, you will need to compare your monthly income to your state’s median income. The court will base this on your earnings from six months before you filed bankruptcy. The court considers the following to be types of income:

  • Wages, salary, tips, bonuses, overtime, and commissions
  • Gross income from a business, or profession
  • Rent and property income
  • Regular child support or spousal support
  • Unemployment
  • Pension and retirement income
  • Workers’ compensation

If your income from these resources exceeds the threshold, the court might instead recommend filing Chapter 13.

You cannot afford to pay your debt

To qualify for Chapter 7 bankruptcy, you must prove that you cannot afford to repay the debt you owe. The court will look at your monthly disposable income to determine if you have enough money left over to pay off some of your debts. If you do, then you may instead need to file for Chapter 13 bankruptcy.

You have not previously had debt discharged through bankruptcy

You will need to be certain you did not have the debt discharged through Chapter 7 bankruptcy within the past 8 years, and through Chapter 13 bankruptcy within the past 6 years. If you did not, then you can be eligible to file for Chapter 7 bankruptcy.

You have not had a previous bankruptcy within the previous 180 days

You can apply for Chapter 7 bankruptcy as long as you did not have a previous Chapter 7 or Chapter 13 bankruptcy dismissed within the past 180 days due to certain circumstances. These reasons can include if you violated a court order, if your bankruptcy was considered fraudulent, or if you requested a dismissal after a creditor asked the court to lift the collections stay.

You received Chapter 7 credit counseling

Before you file for Chapter 7 bankruptcy, you must receive credit counseling through a court-approved nonprofit agency. You will receive a certificate of completion that you must show the court. These sessions present you with options for eliminating your debt rather than filing bankruptcy. This assures the court that you are aware of your choices. Those with physical and mental disabilities or those in the military on active duty can request exemptions from credit counseling.

You did not defraud your creditors

You must not attempt to defraud your creditors to file for Chapter 7 bankruptcy. Some actions that the court can consider to be fraudulent include if you hid property, transferred it to your family and friends, destroyed your property, lied about your income and debt on a credit application, or participated in other dishonest actions.

Contact an Attorney

If you are considering filing Chapter 7 bankruptcy to cope with mounting debt, it’s crucial to hire an experienced attorney to help you through the process. Our experts can help you determine if you qualify, and what steps you need to take. Don’t let debt ruin your life. Call (405) 529-9377 for a free case review.


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