Some people may believe that they are eligible for bankruptcy regardless of their current financial status — they are partially correct. Others believe that the changes in bankruptcy law that came with the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005 made it impossible for most people to find debt relief through bankruptcy — they, on the other hand, are completely wrong. While changes in the bankruptcy laws did restrict some of the eligibility requirements, it did not remove the right of any individuals to seek relief from creditors through the protections offered in bankruptcy.
The Eligibility Confusion
The confusion can be summed up in two words: media and creditors. Creditors, with the help of media outlets, did a fantastic job of convincing most Americans that if they did not file bankruptcy before October 2005 when the new bankruptcy laws took effect, they would not be able to file bankruptcy (or that filing bankruptcy would be much more difficult).
While it is true that the new bankruptcy laws did contain some significant changes, experienced bankruptcy attorneys had already learned the new rules and laws and were ready to continue helping debtors find debt relief through bankruptcy.
You Are Eligible For Bankruptcy
Below are bankruptcy eligibility guidelines that you can use when considering bankruptcy as an option for you. However, please note that this does not replace good, solid bankruptcy advice from an experienced bankruptcy attorney. During a free consultation you can receive the legal advice you need to make an informed decision about filing bankruptcy. For example, you may believe you only qualify for Chapter 13; however, once you meet with one of our attorneys, you may qualify for Chapter 7 or Chapter 13.
Eligibility Requirements for Debtors in Chapter 7
- Debtor must be an individual (or married couple), partnership, corporation or other business entity.
- The debtor’s household income must be below the federal median income level for a family of that size in that jurisdiction. However, if the income is above the median income level, the debtor can complete the Chapter 7 Means Test to determine if he or she is still eligible to file under Chapter 7.
- Within 180 days from the date of filing, debtor could not have filed a previous Chapter 7 or any other chapter of bankruptcy that was dismissed voluntarily by the debtor to avoid creditor’s motions for relief of the automatic stay, dismissed due to the debtor's willful failure to appear before the court or dismissed for the debtor’s failure to comply with orders of the court.
- Within 180 days before filing, the debtor must complete a course and receive a credit counseling certificate from an approved credit counseling agency. (There are a few exceptions to this rule that a bankruptcy attorney can explain.)
- Pay a filing fee of $335 to the Bankruptcy Court with the filing of the bankruptcy petition.
Eligibility Requirements for Debtors in Chapter 13
- Debtor must be an individual (or couple). Debtors can be self-employed or operating an unincorporated business, but debtors may not be partnerships, corporations or other business entities.
- The Debtor’s unsecured debts must be less than $383,175 and the secured debts must be less than $1,149,525.
- Debtor must have a reliable, steady income.
- Within 180 days from the date of filing, debtor could not have filed a previous Chapter 13 or any other chapter of bankruptcy that was dismissed voluntarily by the debtor to avoid creditor’s motions for relief of the automatic stay, dismissed due to the debtor's willful failure to appear before the court or dismissed for the debtor’s failure to comply with orders of the court.
- Within 180 days before filing, the debtor must complete a course and receive a credit counseling certificate from an approved credit counseling agency. (There are a few exceptions to this rule that a bankruptcy attorney can explain.)
- Pay a filing fee of $310 to the Bankruptcy Court with the filing of the bankruptcy petition.
Help for Every Step of the Way
Means test?
Creditor’s motion for relief of the automatic stay?
If you, like many debtors, are overwhelmed with the technical jargon of the eligibility requirements listed above, talk with a bankruptcy attorney. They are there to help you every step of the way, from understanding legal jargon to helping you determine which chapter of bankruptcy you are eligible to file. We will analyze your financial situation, give you all of the available options and then work with you to find an affordable solution to your debt problems that gives you the best advantage going forward.