How to Qualify for a Chapter 7 Bankruptcy

Posted by Wesley Scott on July 31, 2020 at 1:00 PM
Wesley Scott

How does bankruptcy actually work?The Bankruptcy Code lays out the parameters for who can file a Chapter 7 Bankruptcy. Many of these requirements can be found in Section 109 of the Bankruptcy Code, “Who may be a debtor”. As to who qualifies for a Chapter 7 discharge one needs to look at Section 707 and Section 727 of the Bankruptcy Code. When you put these provisions all together you get a better picture of who can file a Chapter 7 Bankruptcy and who can receive a Chapter 7 Bankruptcy discharge. These two things are quite different.

As to who may be a Chapter 7 debtor, the Bankruptcy Code says it can be individuals and corporations. That is simple enough.

Now, who can receive a Chapter 7 Bankruptcy discharge is a little more involved. You can only receive a Chapter 7 discharge in a case filed at least 8 years after a previous Chapter 7 Bankruptcy, in which you received a discharge. Moreover, you can only receive a Chapter 7 discharge in a case filed at least 6 years after a previously filed Chapter 13 Bankruptcy where you received a discharge. 

Now, Section 707 of the Bankruptcy Code defines the ability to fund a Chapter 13 plan. It is commonly referred to as the “means test”. If your income is above state guidelines for a family of your size there is a presumption that filing a Chapter 7 is an abuse (and you should file a Chapter 13 Bankruptcy instead) if you can fund a Chapter 13 Bankruptcy plan according to certain funding levels.

In English, if you have the ability to repay some of your debt you must file a Chapter 13 Bankruptcy.

Call Now for a Free Strategy Session from a MN Bankruptcy Lawyer from Kain & Scott

When the time is right, or when you are ready to get your life back, reach out to Minnesota’s nicest bankruptcy law firm at www.kainscott.com. You will be so glad you did!

A Word from a MN Bankruptcy Attorney, Wesley Scott