To be eligible for a discharge from your overwhelming debt obligations under Chapter 7 bankruptcy, it is absolutely necessary for you to meet the basic guidelines mentioned in the country’s bankruptcy code.
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So, if you are still in the dark about the nitty-gritty of this ultimate debt relief process, then it is advisable that you acquire a working knowledge about the same before proceeding any further.
Are you financially capable enough to make the repayments?
As per the recent amended bankruptcy laws, there are clear demarcation as to who will be granted a discharge from his or her crushing debt woes under chapter 7 bankruptcy and who has to opt for chapter 13 bankruptcy, if at all one wants to got for it.
However, in case of disabled veterans who fell into the debt trap while they were occupied in active duty as well as those who incurred debt essentially because of their failure in business, then they get to enjoy fast-track discharge from those debts under chapter 7 bankruptcy.
What is your monthly income?
According to the fresh bankruptcy rules, the foremost way that the court gets to decide whether or not you are eligible to file for bankruptcy under chapter 7 is how high do you earn in a given month.
In other words, your eligibility to file chapter 7 bankruptcy depends upon your present monthly income against the median income set by your state for a specified family size. Here, the current monthly income is referred to your mean earnings for the past six months, prior to filing of bankruptcy by you.
Therefore, if the court is convinced that you earn lower or equal to the median income, then as per the law, you’ll be considered as an eligible candidate for chapter 7 bankruptcy, provided you’ve fulfilled other requirements as prescribed under the respective bankruptcy code.
Can you make debt payments with your disposable income?
Basically, the true motive behind the means test is to find out whether or not you’ve got enough amount of disposable income by the end of each month. This is done after excluding some specific expenditures of yours and the mandatory debt repayments that are obligated to make every month.
The portion of your disposable income left after meeting all these expenses can help you to repay some selected unsecured debts over a tenure of five years through a court-scheduled repayment plan.
Why you may not file for chapter 7 bankruptcy?
Primarily, you won’t be able to qualify for another discharge under chapter 7 bankruptcy, if you’ve already received it once before, within the last eight years. More, your bankruptcy application under the same won’t be accepted, if you had been given a discharge from your debts under chapter 13 bankruptcy, within the last six years.
Another useful post regarding company debt management can be found at this extensive article on debt management for limited companies.
Apart from that, you won’t get any discharge from your debt obligations, if your bankruptcy case was dismissed by the court within the last 180 days of filing in your application. Some of the reasons for which you may get disqualified for a possible discharge are as follows:
- Violation of the court’s directive.
- The court pronounced a judgment indicting you of fraudulently filing your application or abusing the bankruptcy system.
In addition to that, you may have requested for a dismissal in the event of a creditor requesting for a waiver from the automatic stay. For more information on Chapter 7 bankruptcy you can visit this page.
