When the latest major changes to the bankruptcy code went into effect in 2005, many people in New Hampshire lost the option to file Chapter 7 bankruptcy. The change in the law means that people who can afford to repay some or all of their debts are not able to discharge them through Chapter 7. In order to get the legal protections that bankruptcy provides, they have to file under Chapter 13.
The first step to determining if a person can file under Chapter 7 is evaluating his or her income for the past six months. Income includes salary and possibly other forms of compensation, such as rent from investment property, interest, annuity payments and family support. A person whose income exceeds the median income for a family in the state in which they live has to pass a means test in order to qualify for Chapter 7 bankruptcy.
The means test examines the filer's income and allowable debts to determine if they have enough money left over at the end of the month to repay their creditors. In cases where a person cannot afford to pay those debts, they may be eligible for Chapter 7. However, some other instances would restrict their ability to file for the discharge.
With a few exceptions, most individuals who choose to file for Chapter 7 bankruptcy must complete a credit counseling session prior to filing their paperwork with the court. Failure to complete this requirement can result in the denial of the petition. In addition, anyone who had a bankruptcy petition dismissed in the past 180 days is ineligible to file again. The law also prohibits a person who was found to have obtained credit by falsifying information on an application from filing for Chapter 7 bankruptcy.
An attorney who focuses on bankruptcy cases may be able to help a client who has unmanageable debt understand the requirements for Chapter 7. In most cases, if a person does not qualify, they can still file under Chapter 13.
Source: Findlaw, "Who Can File for Chapter 7 Bankruptcy?", September 04, 2014