Most individuals will qualify to file for Chapter 7 regardless of the amount of debt. However, income must also be considered when filing for Chapter 7 bankruptcy. For example, if disposable income is sufficient to fund a Chapter 13 repayment plan — which is determined by your attorney completing what is called a “Means Test” which subtracts certain allowed expenses and monthly payments for certain debts from your gross income — you will not be allowed to use Chapter 7 bankruptcy but rather qualify for a Chapter 13 bankruptcy.
This is an area where it is important to consult with an experienced bankruptcy attorney. Your attorney will review your situation in depth through the “Means Test” process and advise you accordingly based upon the results.
So to sum it all up – an individual, a partnership, a corporation or other business entity may qualify to file for Chapter 7 so long as:
- During the preceding 180 days, a prior bankruptcy petition was not dismissed due to the debtor’s willful failure to appear before the court or comply with orders of the court.
- The debtor has not voluntarily dismissed the previous case after creditors sought relief from the bankruptcy court to recover property upon which they hold a lien.
- The debtor passes the “Means Test”.
- The debtor has not received a discharge from a prior Chapter 7 within the last 8 years.
- The debtor, within 180 days before filing, has received credit counseling from an approved credit counseling agency.