How to Qualify for a Chapter 7 Bankruptcy

The Bankruptcy Code lays out the parameters for who can file a Chapter 7 Bankruptcy. Many of these requirements can be found in Section 109 of the Bankruptcy Code, “Who may be a debtor”. As to who qualifies for a Chapter 7 discharge one needs to look at Section 707 and Section 727 of the Bankruptcy Code. When you put these provisions all together you get a better picture of who can file a Chapter 7 Bankruptcy and who can receive a Chapter 7 Bankruptcy discharge. These two things are quite different.

As to who may be a Chapter 7 debtor, the Bankruptcy Code says it can be individuals and corporations. That is simple enough.

Now, who can receive a Chapter 7 Bankruptcy discharge is a little more involved. You can only receive a Chapter 7 discharge in a case filed at least 8 years after a previous Chapter 7 Bankruptcy, in which you received a discharge. Moreover, you can only receive a Chapter 7 discharge in a case filed at least 6 years after a previously filed Chapter 13 Bankruptcy where you received a discharge. 

Now, Section 707 of the Bankruptcy Code defines the ability to fund a Chapter 13 plan. It is commonly referred to as the “means test”. If your income is above state guidelines for a family of your size there is a presumption that filing a Chapter 7 is an abuse (and you should file a Chapter 13 Bankruptcy instead) if you can fund a Chapter 13 Bankruptcy plan according to certain funding levels.

In English, if you have the ability to repay some of your debt you must file a Chapter 13 Bankruptcy.

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A Word from a MN Bankruptcy Attorney, Wesley Scott