Chapter 7 Bankruptcy Eligibility Requirements

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Chapter 7 Bankruptcy Eligibility Requirements

Although bankruptcy might be a fine solution to your debt problems, you may not be eligible to file. For example, Chapter 7 bankruptcy isn’t available if you’ve already received a Chapter 7 discharge in a case field within the previous 6 years. And you can’t file Chapter 13 bankruptcy if your debts exceed a certain amount. Your eligibility file is something you should figure out right away.

Chapter 7 Eligibility Requirements
There are several basic eligibility requirements you must meet to file a “consumer” Chapter 7 bankruptcy (the standard liquidation bankruptcy for individuals).

You must be an Individual (or Married Couple) or Small Business Owner
To file a consumer Chapter 7 bankruptcy case, you must be an individual (or a husband and wife filing jointly) or s small business owner. As a small business owner, you can include all business debts on which you have personal liability. For example, if you operate your business as a sole proprietor or in partnership with your spouse, you, or you and your spouse, are personally liable for the debts of the business. For bankruptcy purposes, you and your business are one and the same. You can included all of the business debts in your consumer Chapter 7 bankruptcy case.
Similarly, if you are a member of a business partnership with people other than your spouse, you can file for Chapter 7 bankruptcy as a consumer and include all business debts on which you are personally liable. Your partners will remain fully liable for the debts you wipe out, however.
If you are a member of a business partnership, you’ll probably want to consult a small business lawyer before you file for a bankruptcy. Your obligation to your partners may be governed by any buy sell agreement that requires you to terminate your partnership interest before filing for bankruptcy. If you don’t follow that agreement or any other understanding you and your partners have, you probably will putting the partnership property at risk. Your partners (or ex-partners) may ask the bankruptcy court to lift the automatic stay so they can file a lawsuit against you.
You cannot file a consumer Chapter 7 bankruptcy case on behalf of a corporation, limited liability company, or partnership. In that situation, you must file a “business” Chapter 7 bankruptcy.

You Haven’t Had a Previous Bankruptcy Discharge
You can’t file for Chapter 7 bankruptcy if you got a discharge of your debts in any Chapter 7 or Chapter 13 bankruptcy case begun within the past 6 years. Note that the 6 year period runs from the date you filled the earlier bankruptcy case, not the date of your discharge.

You Aren’t Barred by a Previous Bankruptcy Dismissal
You can’t file for Chapter 7 bankruptcy if a previous bankruptcy case was dismissed within the past 180 days for any of the following reasons:
a) You violated a court order
b) The court rules that your filing was fraudulent or an abuse of the bankruptcy system.
c) You requested the dismissal after a creditor asked the court to lift the automatic stay.

You Couldn’t Pay Off Your Debts Outside of Chapter 7
If you have enough assets or income to repay most of your debts, either in a Chapter 13 bankruptcy or outside of bankruptcy altogether, the trustee may request the judge to consider your Chapter 7 filing a “substantial abuse” of the bankruptcy system and require you to either convert your case to Chapter 13 bankruptcy or have your case dismissed. Trustees are, as of recently, required to asses the feasibility of a Chapter 13 filing under policies issued by the Office of the U.S. Trustee.
Even if the trustee pushes this issue, a judge isn’t likely to find substantial abuse unless both of the following are true:
a) You have an adequate and steady income.
b) With a feasible downward modification of your lifestyle, you could pay off all or most of your debts over 3 to 5 years.

You’ve Been Honest With Your Creditors
Bankruptcy is geared toward the honest debtor who got in too deep and needs the help of the bankruptcy court to get a fresh start. Your Chapter 7 bankruptcy case many be challenged or dismissed if you have tried to cheat your creditors or concealed assets with a mind to keeping them through bankruptcy.
Certain activities are red flags to trustees. If you have engaged in any of them during the past year and are caught, your eligibility to file a Chapter 7 bankruptcy case is likely to be challenged. The most common no no is unloading assets or cash to your friends or relatives to hide them from your creditors. Even if you undo such a transaction before you file Chapter 7 bankruptcy, you may still get your bankruptcy dismissed if the trustee finds out about it. It’s also a no no to:
a) Run up large debts for luxury items when you clearly are broke and have no prospects for paying the debts.
b) Conceal property or money from your spouse during a divorce proceeding.
These activities case a suspicion of fraud over your entire bankruptcy case.

Bankruptcy Is it the right solution to your debt problems? Attorney Robin Leonard

Chapter 7 Bankruptcy Eligibility Requirements

Avoid Bankruptcy and Free Your Debt . Get Refinance Loans , Secured Debt Consolidation or Debt Settlement Advices.