What are the disqualifiers to filing for Chapter 7 bankruptcy?

Debt can quickly mount if you don’t aggressively address it early on. Many consumers who find themselves unable to pay their bills look to different debt relief options to gain a fresh financial start, including bankruptcy.

Chapter 7 bankruptcy can provide you with that clean financial slate that you’re looking for where you can wipe away most of your debts. People often hesitate to file, however. Frequently, they’re concerned that they may not qualify for Chapter 7 — but the disqualifiers only apply to a small group of people. Here’s a look at the few reasons that someone might be disqualified from Chapter 7 relief:

A prior Chapter 7 in recent years

Consumers can only file Chapter 7 bankruptcy once every eight years. The court will likely reject your request to do so if that amount of time hasn’t elapsed since your last discharge. 

Not passing the means test

All debtors must pass the means test to file for Chapter 7 bankruptcy. This is, in essence, a check to see if your income and resources are below a certain threshold. If they are, then the court assumes that you’re truly unable to pay your bills. (If you fail the Chapter 7 means test, you may still be eligible for Chapter 13.)

Failure to complete credit counseling

Anyone who wishes to have their debts discharged in a Chapter 7 bankruptcy must go through court-required credit counseling. The court may dismiss your case if you don’t comply and provide proof of your attendance.

A recently dismissed case

If you recently (within the last 180 days) either asked for a prior bankruptcy petition to be dismissed once your creditors sought the right to repossess some collateral or your petition was involuntarily dismissed because you failed to attend court or comply with the court’s orders, you will have to wait to file again.

Is Chapter 7 bankruptcy the best debt relief option for you?

Chapter 7 bankruptcy is, quite often, the first step toward regaining your good financial footing. Don’t let your worries about eligibility stop you from speaking with an experienced attorney about your situation. They can help you understand what options are available to you and why.

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