Do I qualify to file for bankruptcy?

One of the first questions that comes to mind when you are considering options is “Do I qualify to file for bankruptcy?”  Let’s look at the eligibility requirements for the two most common types of bankruptcy, a chapter 7 and a chapter 13.

Am I eligible to file a Chapter 7?  If you are an individual or a married couple who want to file Chapter 7, your lawyer will review your financial situation to determine if you qualify.  Even if you are married, you can still file by yourself.  Your spouse does not have to file bankruptcy with you.  Your bankruptcy lawyer will use your family financial information to take a test for you called the “Means Test”.  This test is designed to keep people with very high incomes from filing Chapter 7 because they have “the means” to pay their debt.  Even people with very high income can pass the test if all of their expenses and debts and allowable deductions are taken into consideration.  There are exceptions to even taking the means test.  If your income is below the established threshold, you are not even required to complete the means test but are immediately qualified to file a Chapter 7 case.  If your debts are business related rather than consumer related, this can also be an immediate qualification.   The means test is complicated, but I am an experienced bankruptcy attorney who will make sure you get all of the allowances and exclusions on the test that apply to you.  If you pass the means test or if you are exempt from taking the means test, then you can file a Chapter 7 case.

Am I eligible to file a Chapter 13?  There are two main requirements for a Chapter 13 case.  You must have money coming in each month from a job, or Social Security, or something. Then your debts must be under a certain amount. If you add up all your secured debts, like the mortgage, vehicle loans, and furniture notes, the total needs to be under approximately $1.1 million for secured debt. If you then add up what you owe on all your other debts, like credit cards, student loans, taxes, and medical bills you need to be under $383,175.00.  (These numbers are current as of April 2013 and go up every 3 years.)