Bankruptcy is often the first resort for Americans faced with overwhelming debt. However, this does not mean that just about anyone can file for bankruptcy. In order to be eligible for Chapter 7, you must meet certain criteria that prove you are unable to repay your debts. Maybe you might need the help of an Ulster County, NY bankruptcy attorney to understand whether you are eligible to file for Chapter 7 bankruptcy.
In this article, we will discuss 5 reasons why you might be ineligible for chapter 7 bankruptcy.
- Your income is too high
If you earn more than the median income of your state or the median income of your city, you will not be eligible for Chapter 7 bankruptcy. A “means test” is used to find out whether your income is high enough to qualify for Chapter 7 Bankruptcy and determines the portion of your income that is subject to taxes, in order to determine your “disposable income.” If you have an income lower than or equal to your state’s median income, then you are eligible to qualify for Chapter 7 bankruptcy.
- You can repay some debt
If you are not eligible to qualify for Chapter 7 Bankruptcy because your income is too high, then you might qualify if the creditors of your debts agree to a more lenient payment plan with the Bankruptcy Court. If your “disposable income” is too low to meet the minimum income requirements for Chapter 7 bankruptcy, then you might be able to qualify for Chapter 13 bankruptcy.
- Debt was previously discharged in bankruptcy
Another way to be ineligible for Chapter 7 Bankruptcy is to have had a previous bankruptcy discharged in the past. You are not eligible to file for Chapter 7 Bankruptcy if you previously filed for Chapter 7 or any other chapter and had been discharged from your debts.
- A previous bankruptcy case was dismissed within the previous 180 days
If you previously filed and were denied a bankruptcy case, or you filed a bankruptcy case and had it dismissed within the previous 180 days, then you will be ineligible to apply again for Chapter 7 Bankruptcy.
- The debtor defrauded creditors
If you have defrauded creditors or sought to defraud creditors in any way, then you will be disqualified from Chapter 7 bankruptcy. This can include lying to your creditors, hiding information from your creditors, destroying or concealing property, falsifying records or statements, concealing or transferring assets, etc.