Who Can and Cannot File For Chapter 7 Bankruptcy?
Chapter 7 bankruptcy is designed for certain groups of people. This form allows the filer to basically wipe away all qualifying debts. It is the type that most people think of when they think of bankr...
The first group of people who cannot file this form are those who have sufficient income to repay their debts. This has always been the case, as the judge in your case always had the option of telling you "no" if he or she felt that you had enough income to file the repayment form.
That has changed, however, with the 2005 legislation that made adjustments to the filing process. Now, people who want to file Chapter 7 bankruptcy must pass a test known as a means test. This compares their income to that of others in their area, and determines if they have the "right" to file. People who have incomes above a certain level will be deemed to have enough to file a different form, the repayment form, instead.
There are a few groups of people who can get out of this requirement. Disabled veterans, for instance, who took on their debt while they were on active duty are able to file the discharge form without meeting the means test. Those who earned their debts from operating a business also can skip this test. Otherwise, everyone must undergo it.
That said, some people may think they have too much income, when in fact they do not. That is because the formula to determine "income" in the means test is a bit complicated. If you think you have too much income, but want to try to file the traditional way, go ahead and try.
Another group of people who cannot file chapter 7 bankruptcy are those who have filed already in the past eight years. The current laws prevent people from re-filing until eight years have passed. If you originally filed the repayment form, then you only have to wait six years until you are eligible to file again.
Similarly, if you filed but had your case dismissed you may not be able to file again. The law requires that you wait 180 days before you can file again. This is why it is so vital to file properly the first time, because having your case dismissed will lead to delays.
Most people who have incomes in the right range can file Chapter 7 bankruptcy. However, you want to make sure you file properly so that you do not experience any delays and are not forced to watch your case be dismissed. This is why many people opt to use an attorney when they file, because they want to be sure they do not jeopardize their ability to get out of debt.
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