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Can you File for Chapter 7 Bankruptcy?

Author: Nikola Govorko Author Ranking Bronze | Posted: 11-12-2006 | Comments: 0 | Views: 105 | Rating:  (50) Article Popularity - Green (?) Got a Question? Ask.
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Most people file for Chapter 7 bankruptcy because of the three main reasons:

1. It is much faster then the other Chapters. With a little effort on your side, you can have the entire process over in next four to six months.

2. It is also simpler to file. No frequent visits to court are required.

3. There are no after payments. Once your bankruptcy is discharged that is it, you are debt free. (Under the 2005 bankruptcy law, not all debts can be discharged anymore so consult with your attorney before filling).

On the other hand, Chapter 7 has a catch, the court will decide whether you are allowed to file for it or not. One of the main reasons why you can be denied to file for Chapter 7 is your income. If it happens to be sufficient to payoff some of your debts (after your allowed living expenses have been counted in) then you might be forced to file under Chapter 13 bankruptcy law.

How to check if you can apply?

First thing you need to do is to calculate your average earnings in the last 6 months and compare it with average income for the state you live in. You will be allowed to file under Chapter 7 if your income happens to be lover or the same as the median income of the state you live in.

In case that your average income is higher than that, and you still want to apply for Chapter 7 bankruptcy you will have to go through one more test called the Means Test.

So what is a means test?

It is a test based on the results calculated for your allowed living expenses.

How to calculate my living expenses and what can I include in it?

It is actually quite easy to calculate it. Take all your income from one average month and deduct the following allowed expenses:

1) Utility bills, transport (gas), food, clothing. (Make sure to use IRS amounts for these or the court will not take it in to account).

2) Your secured monthly payments like child support, car loan, mortgage and tax.

After you finish with the calculation and your average disposable income per month is lover then $100, you have passed the means test and you stand a fair chance of being approved to file for bankruptcy under Chapter 7.

If on the other hand your disposable income happens to be more than that (figure most often mentioned is $166, but it can vary), you will most likely have to file under Chapter 13 of the bankruptcy law. That is unless you can provide evidence that there are some special considerations to be taken in your account.

For any figures between $100 and $166, it is best to consult with your attorney. Make sure to find an attorney that specialize in bankruptcy and credit repair and has the solid reputation.

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Ask the community a question about this article:

Frequently Asked Questions

How long until a house goes into foreclosure?
By: shelly1066 | 23-08-2008
We are filing for bankruptcy in november and our attorney told us to stop paying our mortgage as of august 1st and let it go into foreclosure.  I'm very nervous about this and wondering how long until the house goes into foreclosure and how long will we have to stay. 

Bankruptcy? Should I?
By: cindyclaaa | 23-08-2008
I am in debt about 25,000.00. I am thinking of filling for bankruptcy however I need to get more information on how that works. I am a single mom of two. I make about 35,000. annually. I rent an apartment for 1300. monthly. Need help

My husband passed away . leaving me with one ...
By: sandy | 22-08-2008
my husband passed away . leaving me with one income can i file bankrupycy and keep my house is there such a thing as hardship

Chapter 13 bankruptcy removal?
By: judy | 22-08-2008
If you have a chapter 13 bankruptcy on your credit report that was dismissed can you get it removed off the report

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By: Tradman75 | 21-08-2008
If I got someone to sign a surety bond for the purchase of a car and I went into 13 or 7 how is that person affected; will they take the car, will they come after the signer or will they re-finance the car with me alone? thanks!

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