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April 12, 2011
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Can I file bankruptcy chapter 7?

In order to be eligible for Chapter 7 Bankruptcy, you must meet several criterias. Under the old bankruptcy rules, the bankruptcy judge had the authority to dismiss a Chapter 7 Bankruptcy case if the judge believes that the debtor had sufficient disposable income to fund a Chapter 13 repayment plan. Also there were no strict rules dictating when a judge can dismiss a case on these grounds as it depended on the facts of the case and the judge’s attitude.

Now that the new bankruptcy law has came into force, there are specific criteria that dictate who will be allowed to stay in Chapter 7 Bankruptcy and who will be forced to use Chapter 13 bankruptcy if they want to file bankruptcy. Disabled veterans whose debts were incurred during active duty and people whose debts come primarily from the operation of an enterprise get a rapid transition to Chapter 7 bankruptcy. All others must meet the following requirements to be eligible for Chapter 7 Bankruptcy.


Eligibility requirements for Chapter 7 Bankruptcy

Answering the following questions will help you determine whether you are eligible to file bankruptcy chapter 7 or not.


What your current monthly income?

Under the new rules, the first step to understanding if you can file for Chapter 7 bankruptcy is to measure your “current monthly income” against the median income for a family of your size in your state. Your “current monthly income” is your average income over the last six months before filing. If your income is less than or equal to the median, you can claim Chapter 7 bankruptcy. If your income is above the median, however, you must use “means test”, another requirement of the new law in order to file for Chapter 7 bankruptcy.


Can you repay some debts?

The purpose of the means test is to figure out whether you have enough disposable income, after deduction of certain allowable expenses and required debt payments, to repay at least a portion of your unsecured debts over a period of repayment five years.


Did you receive any previous discharge in bankruptcy?

You can not file for Chapter 7 bankruptcy if you obtained a discharge of your debts in a Chapter 7 bankruptcy in the past eight years or a Chapter 13 case in the past six years.


Was your bankruptcy request dismissed over the last 180 days?
You can not file for Chapter 7 bankruptcy if a previous Chapter 7 or Chapter 13 case was dismissed within last 180 days. Chapter 7 or Chapter 13 Bankruptcy cases are mostly dismissed due to the following reasons: you violated a court order, or
court ruled that your filing was fraudulent or constituted an abuse of the bankruptcy system, or
you requested the dismissal after a creditor sought relief from the automatic stay.


Did you cheat your creditors?
A bankruptcy court may dismiss your case if it thinks that you tried to cheat your creditors or concealed assets so you can keep them for yourself. If you were engaged in any of such activities during the past year, your bankruptcy case may be dismissed. These activities are red flags to the courts and trustees, like: unloading assets to your friends or relatives to hide them from creditors or the bankruptcy court
running up debts for luxury items when you were broken and could not afford
concealing property or money from your spouse during the divorce proceedings, or
you lied about your income or debts on a credit application



In addition, you must sign your bankruptcy papers under “penalty of perjury” swearing that everything specified is true. If you deliberately fail to disclose property, omit important information about your financial situation, or use a false Social Security number to hide your identity and the court discovers your action, your case will be rejected and you can be prosecuted for fraud.



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