Business & Finance Bankruptcy

What Is the Criteria to File Chapter 7 Bankruptcy?

    Ineligible

    • Debtors are not able to file under chapter 7 if, in the proceeding 180 days, "a prior bankruptcy petition was dismissed due to the debtor's willful failure to appear before...or comply with orders of the court," according to USCourts.gov.

    Eligibility

    • Individuals, corporations or partnerships may file for Chapter 7. To be eligible, individuals must have received, within 180 days before filing, credit counseling from an approved credit counseling agency. Some individuals may be subject to the means test.

    Means Test

    • If the debtor's monthly income is greater than the state median, they may be subject to the means test to determine abuse of Chapter 7. According to USCourts.gov, "if the debtor's aggregate current monthly income over 5 years, net of certain statutorily allowed expenses, is more than (i) $11,725, or (ii) 25% of the debtor's nonpriority unsecured debt, as long as that amount is at least $7,025," abuse may be presumed.

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