An individual who is eligible for Chapter 7 Bankruptcy will be allowed to sell any particular property and use the money to repay his/her debts. In cases when an individual does not own any properties that can be sold, his/her debts will then be cancelled or discharged. However, not everyone is eligible to file for Chapter 7 Bankruptcy. Check out the following tips on how to qualify for this/her type of bankruptcy.
Take a bankruptcy means test
Try your best to be able to pass this test. With this test, your monthly income will be compared to other families who have median family income based on the size of your family. If you are found to have an income that is higher than those who have median income, you may not qualify for the Chapter 7 Bankruptcy. This test will also assess just how much of your monthly income is being spent on paying taxes, consumer purchases, tort debts, and in your business.
You should be married, single or owner of any small business
Chapter 7 bankruptcy for consumers cannot be filed on behalf of a partnership business company, corporation or an LLC company. But, you may file for a business Chapter 7 Bankruptcy instead. These two types of bankruptcy may require different procedures. Married couples may jointly file for Chapter 7 Bankruptcy. You may file for consumer Chapter 7 Bankruptcy if you are a sole proprietor of a small business and have personal liabilities on any of your business debts.
You have no record of bankruptcy discharge for the last 8 years
Those people who already have a record of bankruptcy discharge for the last eight years are not allowed to file for Chapter 7 Bankruptcy. On the other hand, those who have a record of Chapter 13 bankruptcy discharge for the last 6 years are also not allowed to file for Chapter 7 bankruptcy.
Always remember that the filing period should start from the date when your last bankruptcy was filed and not based on the date when your bankruptcy was deemed as discharged.
You should have no record of bankruptcy dismissal
If you are planning to file for Chapter 7 Bankruptcy, make sure that you have no previous record of bankruptcy dismissal especially when it was dismissed due to several reasons. These reasons may include court order violation, fraudulent bankruptcy filing, bankruptcy system abuse or the creditor requested it for some reason.
You have to undergo credit counseling
In order to qualify for Chapter 7 Bankruptcy you must first undergo credit counseling. This must be done with the help of a credit counseling agency that has been duly approved by the government. You have to complete the counseling process within 180 days before your previous bankruptcy was discharged. The credit counseling session may include discussions about financial management. The said counseling service may be offered in varied costs depending on the agency.