Bankruptcy can be a helpful solution for individuals facing financial difficulties. Chapter 7 Bankruptcy, also known as “liquidation bankruptcy,” is a type of bankruptcy that allows individuals to discharge most of their unsecured debts, such as credit card debt and medical bills. However, not everyone qualifies for Chapter 7 bankruptcy. In this blog post, we will discuss the requirements to qualify for Chapter 7 bankruptcy.

First and foremost, you must pass the means test. The means test compares your average monthly income over the past six months to the median income in your state. If your income is less than the median income in your state, you automatically qualify for Chapter 7 bankruptcy. If your income is above the median income, you must pass a more detailed means test to determine if you still qualify. The means test takes into account your expenses, such as rent or mortgage payments, car payments, and living expenses, to determine if you have any disposable income left to pay your debts.

Secondly, you must not have filed for Chapter 7 bankruptcy in the past eight years or Chapter 13 bankruptcy in the past six years. If you have filed for bankruptcy in the past, you may not be eligible for Chapter 7 bankruptcy.

Thirdly, you must not have committed any fraud or other illegal acts, such as lying on a credit application, to obtain credit. If you have committed fraud, you may not be eligible for Chapter 7 bankruptcy.

Lastly, you must not have any Assets that are non-exempt. Non-exempt assets are assets that can be sold to pay your creditors. Exempt assets, on the other hand, are assets that are protected under the law and cannot be sold to pay your creditors. Each state has its own list of exempt assets, but common examples include a certain amount of equity in your home, a certain amount of personal property, and retirement accounts. If you have non-exempt assets, you may not be eligible for Chapter 7 bankruptcy, as those assets may need to be sold to pay your creditors.

In summary, to qualify for Chapter 7 bankruptcy, you must pass the means test, not have filed for bankruptcy in the past six to eight years, not have committed fraud or other illegal acts, and not have any non-exempt assets. If you meet these requirements, Chapter 7 bankruptcy may be a viable option for you to get a fresh start and relieve yourself of unmanageable debt. However, it is important to consult with a qualified bankruptcy attorney to determine if Chapter 7 bankruptcy is the right choice for your specific situation.

Feel free to reach out to your Stockton bankruptcy attorney at 209-952-0355

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