You may be eligible to file for Chapter 7 bankruptcy if your “current monthly income” is below the median income in your state. The state’s median income is determined by the average income of a family that is a similar size to yours.
If you earn below this amount, you may file for Chapter 7 bankruptcy, provided you meet other requirements. This article will discuss Chapter 7 in more detail, but our law firm also offers free case evaluations for those interested in filing for bankruptcy.
Chapter 7 Bankruptcy Is an Option for Individuals and Small Business Owners
The U.S. Courts note that while individuals and small business owners can file for Chapter 7, there may be alternatives to pursue should interested parties qualify for those routes.
Chapter 7 involves “liquidation,” which is the sale of non-exempt property for the purpose of distributing the proceeds to your creditors. If you are able to repay a portion of your debts, you can file for Chapter 13 bankruptcy instead and receive a court-approved repayment plan.
Business owners may opt to file for Chapter 11 bankruptcy to reorganize their debts instead of liquidating assets.
Certain Assets Are Exempt from Liquidation
Most individuals who file Chapter 7 bankruptcy are able to exempt or protect all of their assets and property during the bankruptcy process. State law provides that certain types and amounts of assets are protected such as equity in your home, your car, or your household goods and furnishings.
If you file for Chapter 7 bankruptcy and own assets that cannot be fully exempted, you are not in charge of selling your own property. Instead, your case will be appointed a trustee, who will review which property is exempt from liquidation and sell the non-exempt property.
Creditors will receive whatever proceeds are made off your non-exempt property, and the rest of your debts will be discharged. However, In most cases, debtors are able to retain most (or all) of their assets, including their:
- Pensions and retirement accounts
- Household items, e.g., furniture
- Tools of their trade
Certain Individuals May Be Ineligible to File for Chapter 7 Bankruptcy
Filing for bankruptcy can be a complex process, as each chapter adheres to strict laws and rules set by the Bankruptcy Code. Even if your income is below the state’s median income, you may be considered ineligible for Chapter 7 bankruptcy if:
- You received a previous Chapter 7 bankruptcy discharge within the last eight years. Though you can still file for Chapter 7 bankruptcy, you would not be able to receive a debt discharge until enough time has passed, making this option less favorable for you. According to the U.S. Courts, you must wait at least eight years before you can receive another Chapter 7 discharge.
- You had a previous bankruptcy dismissal within the past 180 days. You may be considered ineligible for Chapter 7 bankruptcy if you filed for bankruptcy within the last 180 days and were dismissed because you violated a court order or did not appear for a court hearing.
- You attempted to commit bankruptcy fraud or abuse. When you file for bankruptcy, an appointed trustee will investigate your finances, including your previous filing history. If they find that you attempted to hide your assets or defraud your creditors in another way, you may be deemed ineligible.
Our team can explain your options and make a recommendation after reviewing your situation. If other bankruptcy chapters are more suitable for your situation, we will suggest those and help you file accordingly.
A Bankruptcy Lawyer from Our Team Can Prepare Your Case
If this information appears overwhelming, do not feel discouraged. You can hire a bankruptcy lawyer from our law firm to prepare your case and represent your financial interests. In fact, once you become our client, our team can take control of your case and handle most duties for you.
By working with us, you can expect us to:
- Keep you updated throughout the bankruptcy case process
- Prepare and file the appropriate paperwork for your case
- Check that all information you bring forward is accurate, correct, and honest
- Represent you during your 341 meeting and other court hearings
- Handle legal obstacles that might occur, such as delays or motions
- Answer your questions as we pursue your case
Our team will be dedicated to your financial relief. We handle multiple types of bankruptcy cases, so we are prepared to help you file for Chapter 7 bankruptcy. That being said, we are also equipped to help you file for alternative chapters if those are more suitable for your situation.
Farmer & Morris Law, PLLC Can Help You File for Chapter 7 Bankruptcy
If you would like more information on whether you are eligible to file for Chapter 7 bankruptcy, call our team at Farmer & Morris Law, PLLC at (828) 286-3866. We can explain the eligibility requirements for Chapter 7 bankruptcy and review your case to see if it is the right financial option for you. If so, we can have one of our bankruptcy lawyers start preparing your case and representing your interests in court.