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Detailing Chapter 7 dismissal guidelines

For many in Hillsborough County, bankruptcy may represent the best option for re-establishing themselves in a favorable financial position. Many may, however, not share this same view, thinking instead that those who seek Chapter 7 bankruptcy protection are abusing loopholes in the law in order to avoid repaying their debts. Yet a closer examination of filing guidelines may reveal it to be virtually impossible to abuse this particular debt relief option.

Those filing a Chapter 7 bankruptcy must first pass what is known as the “means test.” If one’s income is below the state median average, he or she automatically passes. If this is not the case, however, the court has another test to determine whether or not allowing a person’s bankruptcy case to proceed would be an abuse of Chapter 7 privileges. According to the website for the United States Courts, if one’s aggregate monthly income over five years is either $12,475, or if his or her nonpriority unsecured debts exceeds $7,025, 25 percent of that amount, there may be a presumption of abuse.

Even if one meets the Chapter 7 filing standards, his or her case may still be dismissed in certain scenarios. According to the Legal Information Institute of the Cornell University Law School, those scenarios include:

  •          If any unreasonable delays by the debtor are deemed to be prejudicial to his or her creditors.
  •          If a debtor fails to pay any mandated charges or fees.
  •          If the debtor fails to file the necessary forms after petitioning for bankruptcy protection.

In the event that a motion to dismiss is enacted, or one fails the Chapter 7 means test, he or she may still petition for his or case to be converted to a Chapter 11 or 13 bankruptcy.  

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