Chapter 7 Bankruptcy Eligibility
Wondering if you can file? Call our Oklahoma City bankruptcy lawyer!
If you are considering filing for
Chapter 7 bankruptcy, you must first pass the means test. This is the part that many individuals
can get overwhelmed with. The good news is that you do not have to figure
it out on your own! Alexander Hilton & Associates has helped countless
clients successfully navigate their Chapter 7 bankruptcy filings and can
do the same for you.
With more than two decades of proven experience under our belts, we know
how to quickly and effectively determine when our clients are eligible
to file under Chapter 7. When you come to us, we will help you gather
all financial documents, calculate your current monthly income accurately,
and assess whether Chapter 7 will work for your situation.
Determining Your Eligibility for Bankruptcy
In order to limit who can file for Chapter 7 bankruptcy, the government
created the means test. This helps prevent unqualified debtors from using
this chapter to discharge all their debts, despite the fact that they
could pay some of them back. The means test basically measures a person’s
finances against the average in their area to determine if they will be
eligible to file.
More specifically, you will be asked the following two questions:
- Is your monthly income less than the median for a household of your size
- Do you have enough disposable income to pay off some of your debts?
For example, in Oklahoma City the median monthly income averages around
$5,280 for a household of 4. If you land above that, but your monthly
expenses leave you no room to pay off debts, you could still pass the
means test and qualify for Chapter 7. However, if you don’t pass,
that doesn’t mean you are out of legal options. You may still qualify for
Chapter 13 if you have enough left over income to pay back a portion of your restructured debts.
Exceptions to the Means Test
In several situations, individuals can gain somewhat of a fast-pass to
filing Chapter 7 bankruptcy, without having to qualify for the means test.
Those that can be considered exceptions to the means test include:
- Disabled veterans who incurred most debts while serving
- The national guard and members of the military reserve
- Those with more than 50% non-consumer debts (business debts)
To qualify as a disabled veteran, your disability rating must be at least
30%. As a National Guard or military reservist, you must be currently
on duty or just recently on duty within the last 540 days, so long as
at least 90 days were served. In the case of non-consumer debts, you must
be able to prove that your debts were primarily gained due to business
reasons, or essentially anything that is not considered consumer debt.
In contrast, consumer debt is anything gained for individual, familial,
or household reasons, such as medical bills, student loans, or car loans.
Don’t wait any longer! Find out if you qualify for Chapter 7 today by
calling our OKC bankruptcy firm.