When filing an individual consumer bankruptcy you have to pass a means test and a court will not allow your case to proceed if you have filed a bankruptcy within certain time frames, or if the court suspects cheating on your part. Note an incorporated entity is forbidden from debt discharge in Chapter 7.
Income Versus Debts
Let’s go over some of the rules for meeting Chapter 7 bankruptcy debt discharge criteria. If you fail to qualify, you will need to consider Chapter 13 bankruptcy.
You need to start by calculating your current monthly income versus the median income for a family of equivalent size in the state where you reside. This total is the average monthly income from the previous six months. If the income is equal too or less than the median, the law presumes you qualify for Chapter 7. if it is greater than the median, you must submit a means test to see if you qualify.
Disposable Income And Debt Repayment
The means test discovers if you have the disposable income to repay some of your unsecured debts over a five year repayment period. Besides the means test, the bankruptcy trustee will examine your finances looking for your current income and expenses and the amount of disposable cash available to pay creditors. The trustee will assess your Schedule I (income) and Schedule J (expenses) – if the trustee feels you can make payments to your creditors, he will most likely recommend Chapter 13 bankruptcy to the court
You will not qualify for Chapter 7 bankruptcy if you obtained a discharge of your debts in a Chapter 7 bankruptcy case within the last eight years, or a Chapter 13 case within the previous six years. Nor can you file for Chapter 7 or Chapter 13 if your case was not accepted by the court in the past 180 days because:
- The dismissal was requested after the creditor requested relief from the automatic stay
- A court order violation
- The court ruling your filing was fraudulent or it constituted an abuse of the system
Corporations or LLC’s
Chapter 7 bankruptcy will not eliminate the debt of an LLC or corporation. But the trustee will liquidate the assets of the company and distribute the funds raised to the creditors.
Speak With Our Bankruptcy Lawyers In Phoenix & Scottsdale
Canterbury Law Group should be your first choice for any bankruptcy evaluation. Our experienced professionals will work with you to obtain the best possible outcome. You can on the firm to represent you well so you can move on with your life. Call today for an initial consultation. We can assist with all types of bankruptcies including Business Bankruptcy, Chapter 7 Bankruptcy, Creditor Representation, Chapter 5 Claims, Chapter 13 Bankruptcy, Business Restructuring, Chapter 11 Bankruptcy, and more.
*This information is not intended to be legal advice. Please contact Canterbury Law Group today to learn more about your personal legal needs.