How Much Debt Do I Need to File Chapter 7 Bankruptcy?
While filing for bankruptcy can provide relief from certain kinds of debts, that relief isn't always available to everyone. There are different types of bankruptcy filings available to individuals and each has its own requirements that need to be met first.
For example, Chapter 7 bankruptcy, often referred to as "liquidation" or "straight bankruptcy" may allow you to get rid of most of your debts and start over with a clean slate, but first you must qualify for Chapter 7 by meeting certain criteria. Here are the debt and eligibility requirements for filing Chapter 7 bankruptcy.
While there is no minimum amount of debt required in order to file for Chapter 7 protection, you will need to demonstrate an inability to pay your debts. Perhaps the biggest factor in your ability to repay your creditors is your income. If your monthly income -- including wages, salary, tips, bonuses, overtime, and commissions; gross income from a business, profession, or a farm; interest, dividends, and royalties; or rents, real property income, and income from other sources -- is equal to or below the state monthly median where you live, you may file for Chapter 7.
If your monthly income exceeds the state median, you may still qualify for Chapter 7 if you can demonstrate that your disposable income -- what you have left over after paying "allowed" monthly expense like rent and food -- is not enough money to pay your unsecured creditors through a Chapter 13 repayment plan.
Certain other factors will disqualify you from Chapter 7 eligibility. You may not be able to file for Chapter 7 if:
- Your debt was previously discharged in bankruptcy, generally within the past six or eight years;
- You had a previous Chapter 7 or Chapter 13 bankruptcy case dismissed within the past 180 days;
- You failed to participate in credit counseling within 180 prior to filing for Chapter 7; or
- It appears you attempted to defraud your creditors.
Filing for bankruptcy can be a complicated procedure -- contact an experienced bankruptcy attorney for help.
- Find Bankruptcy Lawyers Near You (FindLaw's Lawyer Directory)
- 7 Things You Need to Know About Bankruptcy (FindLaw's Law and Daily Life)
- What Are the Different Types of Bankruptcies? (FindLaw's Law and Daily Life)
- Pros and Cons of Declaring Bankruptcy under Chapter 7 (FindLaw's Learn About the Law)