Bankruptcy courts only allow those who meet the guidelines to have the opportunity to obtain debt relief through chapter 7. To find out more about these restrictions, read on and see if you can file.
- You must have residency status. That means you have lived in your state long enough to call yourself a resident. The time varies by state. In certain cases, however, you can file chapter 7 using your previous state's residency status if the timing is right.
- Your income must be low enough. Each state has a median income level, and your income should be below that mark to file for chapter 7. However, chapter 13 has no such income requirements. If you want to file chapter 7 but your income appears to be too high, you could still file if you have enough deductions. For example, larger-than-usual childcare or housing expenses could qualify you to file even with a larger income.
- You must take one bankruptcy credit counseling class before you file. This class consists of a listing of your monthly expenses along with your income. The credit counseling agency then reviews your numbers to make sure that you are not able to pay your debts without filing for bankruptcy. Don't forget, therefore, to list every debt you have. Leaving anything out could disqualify you to file.
- If you have a past chapter 7 or 13 bankruptcy, you must have waited the appropriate time before filing again. While you are not limited in the number of times you can file, the timing of the filings matter.
- You must have not had a case dismissed for fraudulent activities. Some filers accidentally make mistakes when they file and that can mean your case is dismissed. In most cases, you are allowed to file again if your case is dismissed without prejudice. However, if you have been accused of fraud and your case was dismissed with prejudice, you may be barred from filing for life. Fraudulent activity might mean:
- Hiding assets from the bankruptcy trustee.
- Lying on your bankruptcy forms.
- Attempting to avoid losing property by selling or giving it away before you file and then not admitting it when questioned.
- Not disclosing all your income.
- Purposefully using your credit cards or taking a loan right when you knew you were about to file for bankruptcy.
To learn more about any of the above issues, speak to a bankruptcy attorney.