Not just anyone is entitled to file for Chapter 7 bankruptcy. Instead, it’s necessary for you to meet established criteria to do so. If you happen to fall short in meeting those qualifications, a bankruptcy court trustee may allow you to convert your case to a Chapter 13 bankruptcy instead.
One of perhaps the most common reasons a debtor may not be eligible to file for Chapter 7 bankruptcy is that they earn too much money. To determine whether you qualify, the federal government has created what’s known as a “means test.” It requires you to take both your income for the most recent month and your six-month average and compare it to the established median income in New Jersey.
If your income appears to be either on par with or falls below the state’s median income, you’re likely eligible to file for Chapter 7 bankruptcy. However, if your income exceeds that amount, then you’ll have to move on to the second step of the test.
At this next stage, your existing monthly financial obligations will be compared to your monthly income. If your expenses don’t add up to your total earnings, it’s likely that the trustee will reject your Chapter 7 filing. If he or she does, you’ll likely be required to repay your creditors by filing for Chapter 13 bankruptcy instead.
If you’ve filed for Chapter 13 bankruptcy during the last six years, or Chapter 7 during the last eight, your debt is unable to be discharged. A debtor is also prohibiting from filing for bankruptcy within 180 days of a previously dismissed filing of any type.
Any debtor that fails to take required credit counseling within 180 days of filing for a Chapter 7 bankruptcy may also have the case dismissed. Any bankruptcies that defraud creditors may also be nondischargable.
If you’re struggling to pay down your debt, a Toms River Chapter 7 bankruptcy attorney can provide guidance in your legal case.
Source: FindLaw, “Who can file for Chapter 7 bankruptcy?,” accessed Feb. 09, 2018