Assuming one meets the jurisdictional requirements to file Chapter 7 Bankruptcy, what are the basic requirements to qualify to file a Chapter 7 Bankruptcy? Good question. I have had people over the years who wanted to file a Chapter 7 Bankruptcy but could not. Why? Section 707(b) lays out the elements associated with what we call the “means test”. Basically, if your income is over the median income for your family size in your state, you must go through a “means test” which is a combination of real numbers and set numbers.
If the result produces a positive number, you are presumed to be required to file a Chapter 13 Bankruptcy where you make payments back to your creditors. Now, if the result is negative there is a presumption you can file a Chapter 7.
To me, the bottom line is this--- if you have money left over after you pay your reasonable and necessary expenses, you are required to file a Chapter 13 Bankruptcy, not a Chapter 7 Bankruptcy. It all boils down to your ability to repay your creditors back something over a 3 year plan or not. For example, I have had people who make $15.00 per hour and they do have the ability to make payments back to their creditors because they have almost no expenses. Consider a person who lives with their parents and has no rent, no student loans, no child support, no vehicle expenses etc. Chances are this person may have the ability to pay something back.
However, in most situations like that, this person is only living at home because they could not afford to be on their own. In those cases we often estimate some expenses like rent, utilities, and food. But in keep in mind, you qualify to file a Chapter 7 Bankruptcy if you have no disposable income.
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