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Chapter 7 Bankruptcy: 3 Eligibility Requirements

27 February 2015 by Louise Boyd

Not everyone looking to file for bankruptcy actually qualifies for a chapter 7 filing. There are numerous criteria one must meet, regardless of whether or not you might have already been told that you're a prime candidate for a chapter 11, chapter 13, or chapter 20 bankruptcy. Each has unique stipulations and guidelines regarding which assets are forfeited and which you are permitted to retain, as well as things like payment plans, income levels, etc. This article discusses the eligibility requirements for those who wish to complete a chapter 7 bankruptcy filing.

Concerning Employment Status

The allowance to file for chapter 7 bankruptcy hinges more on your annual income than it does on whether or not you are currently employed. The government employs what is known as the 'means test', which compares your annual income against the mean income of the state in which you reside. If the amount you earn is below the state's mean income, than you automatically satisfy the income criteria for a chapter 7 filing.

Regarding Previous Bankruptcy Filings

There are guidelines that restrict the number of times an individual may file for bankruptcy, but they differ depending on whether the individual previously completed a chapter 7 or chapter 13 filing. Those who wish to file a chapter 7 bankruptcy will only be permitted to do so if they have not filed a chapter 7 bankruptcy within the last eight years. However, those who have already filed a chapter 7 bankruptcy are allowed to file for chapter 13 bankruptcy after only four years. If you previously received a discharge under a chapter 13 filing, you must wait six years before you can begin a chapter 7 filing.

Concerning The Intentional Defrauding Of Creditors

When most people think of fraud, they might envision scam artists writing bad checks or sending out fraudulent emails asking for homeowners' social security numbers and bank information. But defrauding a creditor can also include something as seemingly innocent as storing valuables at a family member's home to avoid having to sell them to repay creditors.

Even something as 'harmless' as exaggerating your income on a credit card application may ultimately result in a denial of your application to file for a chapter 7 bankruptcy. There are strict regulations regarding what constitutes an attempt to defraud creditors and, more importantly, a zero-tolerance policy when it comes to those who wish to file for chapter 7 bankruptcy.

These represent the three main criteria for anyone wishing to file for chapter 7 bankruptcy. However, even if you aren't quite sure whether or not you qualify for any particular one, but you're contemplating a bankruptcy filing, contact an attorney. They will be able to help you better understand if bankruptcy is the right choice, and, if so, what your options are.

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