Chapter 7 bankruptcy is a way for people with an overwhelming amount of debt to have their debts cleared, allowing them to start over financially. This bankruptcy eliminates certain types of unsecured debts, such as credit card debts, some taxes, medical bills, utility bills, past-due rent, and personal loans. Some types of debt will not be discharged in bankruptcy, including child support and alimony, most student loans, and debts incurred by fraud. In order to qualify, debtors will need to meet the requirements of Chapter 7 bankruptcy.

Rules and Requirements of Chapter 7 Bankruptcy

Chapter 7 bankruptcy offers some advantages over Chapter 13 bankruptcy. Unlike Chapter 13, debtors do not have to follow a court-approved repayment plan for outstanding debts, and there is no limit on the amount of debt that can be forgiven. In addition, once the bankruptcy-eligible debt has been discharged in Chapter 7, the debtor is no longer responsible for repaying any of the past due debt.

In order to file Chapter 7 bankruptcy, you will have to:

  • Meet the income requirements. Eligibility for Chapter 7 bankruptcy depends on your income. Our office will compare your current monthly income to the median income for a family of your size in Georgia. If your income is less than or comparable to the median, you should be eligible for Chapter 7 bankruptcy.
  • Pass the means test. If your income is higher than the median, you can still file for Chapter 7 bankruptcy as long as you pass the “means” test. This test deducts your monthly expenses from your monthly income to determine your monthly disposable income. If your monthly disposable income is too high, you will be disqualified from Chapter 7 bankruptcy.
  • Wait six to eight years after a previous bankruptcy. If you previously discharged debts through Chapter 7 bankruptcy, you must wait eight years before filing Chapter 7 again. If you are not eligible to file Chapter 7, you can file Chapter 13 to obtain the protection of the bankruptcy court but, depending on the time since filing Chapter 7, you may or may not be eligible for a Chapter 13 discharge.
  • Be honest about your financial situation. It is vital that you do not attempt to hide any assets or conceal debts from the bankruptcy court. If the court discovers that you tried to trick or evade your creditors, transferred assets to your friends and family to protect them, or otherwise lied about your income or debts, you will be denied relief through Chapter 7.

If you qualify for Chapter 7 bankruptcy, your debts could be discharged in as little as three months. Call us today or fill out your contact information to speak to a Valerie G. Long about your options.