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Understanding Chapter 7 bankruptcy eligibility

Chapter 7 bankruptcy is one of the most common bankruptcy filings because it allows debtors to quickly settle their debts. It also offers a significant debt discharge, in most cases. However, Chapter 7 bankruptcy is not available to all debtors. In order to qualify, you must be able to show that you would be unable to realistically pay off your debts with your current income.

If you want to file for Chapter 7 bankruptcy, it is important that you fully understand how eligibility is measured. By preparing adequately for the means test, you will have a better chance of efficiently proceeding through the process.

Chapter 7 bankruptcy is not possible for big businesses

If you are an individual, a married couple, or the owner of a small business, you may be able to file for Chapter 7 bankruptcy. However, this type of bankruptcy filing is not a possibility for Limited Liability Companies (LLCs), corporations or partnerships.

You must have a low income to qualify

Before being able to file for Chapter 7 bankruptcy, you must pass the bankruptcy means test. This test will measure your income against the median income of your state, based on the size of your household. The more dependents you have, the better chance you will have of passing the means test.

If your income suggests that you have enough funds to pay off your debts with a Chapter 13 bankruptcy filing, it is likely that you will not be able to file for a Chapter 7 bankruptcy.

You must have a credit counseling session

In order to get your bankruptcy discharge, you must have received credit counseling within the last 180 days. This will include a 2-hour financial management course by a government-approved credit counseling agency. The intention of these courses is to prevent bankruptcy filers from getting into debt for a second time. Ensuring that you meet the credit counseling requirements is essential, because failing to do so may mean that your bankruptcy case will be dismissed.

If you want to benefit from the advantages of a Chapter 7 bankruptcy in New Hampshire, it is important to prepare yourself by understanding the means test requirements and by organizing your documents.

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