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Qualifying for Chapter 7

Due to the widespread availability of information on the Internet, many people that may qualify for a chapter 7 bankruptcy — and a discharge of most debts in roughly four months — decide (incorrectly) that they do not qualify for chapter 7.

There are generally three ways to qualify for chapter 7. Note that all bankruptcy cases have a good faith filing requirement, in addition to the steps below.

Option 1: Income lower than Median Family Income. If your household income for the prior six months is less than the average family income in your home state, you should be eligible for chapter 7 relief.

Option 2: The Means Test. If, after applying certain guideline expenses to your last six months’ income, you have $150.00 or less per month with which to pay your general unsecured creditors (medical bills, credit cards, etc.), you should be eligible for chapter 7 relief.

Option 3: Special Circumstances. If you can prove that you have certain reasonable and necessary expenses that fall outside of the “means test” guideline expenses and that reduces your ability to pay to $150.00 or less per month to your general unsecured creditors, you should be eligible for chapter 7 relief.

The important thing to take away from this — it takes an expert looking at your entire situation to determine if chapter 7 is an option or if chapter 13 is a better fit for you. Give us a call and schedule a free appointment to go over your options with a qualified attorney.