Chapter 7 bankruptcy provides very thorough relief from debt by wiping out most unsecured debt and allowing the debtor to have a fresh start. To prevent consumers from abusing the system, however, Congress has provided eligibility requirements for filing a Chapter 7 case. Here are the main requirements to qualify for Chapter 7 bankruptcy relief.
(For more articles about Chapter 7 bankruptcy, including how it works and how to file, see our Chapter 7 Bankruptcy area.)
If you filed a Chapter 7 petition and received a discharge in the past, you must wait eight years from the filing date of the previous bankruptcy before filing another one.
If you filed a previous Chapter 7 case but did not complete the case and did not receive a discharge, you may file a new Chapter 7 at any time, provided the court in the previous case did not bar you from filing again and you otherwise qualifies for Chapter 7.
If you previously filed and received a discharge in a Chapter 13 bankruptcy case, you must wait six years from the date that Chapter 13 was filed before filing for Chapter 7. If you did not complete or receive a discharge in the previous Chapter 13 case, you can file a Chapter 7 case at any time assuming you otherwise qualified for Chapter 7.
See Also: How Often Can You File for Bankruptcy?
Before you file for Chapter 7 bankruptcy, you must complete a prebankruptcy credit counseling course conducted by an approved agency. You must complete this course within six months prior to the date you file for bankruptcy. Once the counseling is complete, you will receive a certificate that you must file with the court.
See Also: Credit Counseling Requirement for Bankruptcy.
The means test is a calculation of your gross household income for the six-month period prior to the date you file bankruptcy. The means test calculation takes the average of your gross household income over that six month period and compares it to the median gross monthly income for families of that same size in that area, set forth by the Internal Revenue Service.
If your average gross monthly income is below the IRS median income, you pass the means test and can file Chapter 7 if you meet the other requirements.
If your average gross monthly income is above the median, you must complete more sections of the means test and can make certain deductions to try to get below median. If you are then below median after making allowed deductions, you have passed the means test and can file Chapter 7 if you otherwise qualify.
To learn more, see The Means Test in Chapter 7 Bankruptcy.