Are you eligible for Chapter 7 bankruptcy filing?
By: BGIAPDA | Posted: 16th August 2010
US laws entitles you to file bankruptcy under varied chapters, the most common being Chapter 7, 11 and 13. Due to the changes that came into effect in 2005, Chapter 7 bankruptcy filing procedures have acquired some stricter laws. Although the number of filers has not decreased it certainly demands for critical analyzes on your part before you actually consider filing.
The question that arises in the primal level is whether you are eligible for Chapter 7 bankruptcy filing? If yes, then on what grounds?
The laws under bankruptcy make it mandatory for you to qualify the "Means Test" before you file Chapter 7 bankruptcy in your state. The means test allows you to determine the net disposable income available with you in order to pay back the creditors. That makes it imperative for bankruptcy filers to have some critical information about eligibility requirements before they file a chapter 7 bankruptcy case.
Chapter 7 bankruptcy entitles you for liquidation of assets in order to pay off the creditors. The guidelines mentioned that in order to qualify for chapter 7 you are required to fulfill the terms and conditions stated by the bankruptcy law. The basic terms stated as per the laws include the following:
-You should have a legal residence in US.
-You need to pass the "Means Test".
-If there are any legal complications involved, it is advisable that you consult a skilled bankruptcy lawyer. He can guide you with other options in case you do not qualify for the "Means Test".
How chapter 7 qualification is restricted through the Means Test?
The ‘Means Test' is the determining component for Chapter 7 bankruptcy filing. The specifications provided makes it customized for individuals who fulfill the basic criteria. Under the new bankruptcy rules in order to qualify for a chapter 7 you need to fulfill the following:
1. You current monthly income has to be less than or equal to the median household income specified in your state for a family of your size.
2. If your monthly income exceeds the average income, you need to check whether you fulfill the "Means Test" specifications of your state. Through the Means test you can find out the extra income sources in your list. You can get the exact details of the amount by subtracting your average income, debt payments and IRS unapproved expenses from your actual income. If the results of the "Means Test" prove that there is enough disposable income, chapter 13 bankruptcy filing can also be a favorable option.
It is to be remembered that bankruptcy filing can be a tedious job and you may not be aware of the complications involved. Considering the complexities involved, it is advisable that you look for professional guidance. Utilizing the skills of a bankruptcy lawyer can be a great option to look forward to. With expert guidance from a bankruptcy lawyer you can be sure of the entire process and can look forward to sorting out your debt issues faster.
(This article is a guest post by BG, an IAPDA Certified Debt Arbitrator working with Oak View Law Group. He offers legal advice on chapter 7 bankruptcy laws to consumers in order to resolve their debt issues. With his active guidance many individuals are now enjoying a debt free life.)
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Tags: disposable income, assets, chapter 7 bankruptcy, creditors, bankruptcy filing, liquidation, eligibility requirements, bankruptcy law, means test, bankruptcy case, bankruptcy lawyer