How do I qualify for Chapter 7 bankruptcy?

On Behalf of | Aug 3, 2018 | Chapter 7 Bankruptcy |

If you are seeking debt relief, understanding how to qualify for personal bankruptcy protection is an important step in understanding your options. One type of personal bankruptcy is Chapter 7 bankruptcy. In general, there is a means test that is used to determine who is eligible to file for Chapter 7 bankruptcy.

The Chapter 7 bankruptcy means tests looks at the filing party’s average monthly income for six months prior to filing for bankruptcy and compares it to the state’s median family income. If the filing party’s income is higher than the state’s median family income, they may not be eligible to file for Chapter 7 bankruptcy. Conversely, of course, if their income is lower than or equal to the state’s median family income, they may qualify to file for Chapter 7 bankruptcy protection.

The income calculation to qualify will include several possible sources of income including wages, salaries, tips, bonuses, overtime pay and commissions; gross income from a business, profession or farming income; interests, dividends and royalties; annuity payments; rental and real property income; child support and spousal support; pension and retirement income; unemployment income; workers’ compensation; and state disability insurance benefits. The second part of the means test involves evaluating the filing party’s disposable income.

It is important to keep in mind that even if the filing party does not qualify for Chapter 7 bankruptcy, additional options may be available such as Chapter 13 bankruptcy. Personal bankruptcy protections exist to help consumers during a difficult time if they are struggling with debt and an inability to repay it which can occur for a variety of reasons; as such, it is important for them to be familiar with these important protections available to them.


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