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Advantages To Filing Chapter 7 Bankruptcy

There are advantages to filing chapter 7, this is why it is most consumers first choice when thinking about bankruptcy. Chapter 7 bankruptcy can give you a fresh start and clean slate when it comes to debt and overcoming financial burdens. Chapter 7 was so popular for consumers that the bankruptcy laws had to change to make it slightly harder for people to get approved for it. Working with a local bankruptcy attorney, will give you a better chance of getting approved for it.

Millions of people use chapter 7 bankruptcies because it can give them relief from overwhelming debt. Chapter 7 bankruptcy can help wipe away unsecured debts, like medical bills, credit cards and unsecured personal loans.

Advantages for Chapter 7 bankruptcy

-All of your unsecured debt can be wiped away in 4 to 6 months.

-As soon as your petition for chapter 7 bankruptcy you will receive and automatic stay, which means you, will no longer receive harassing phone calls and letters from creditors.

– It is the fastest way to receive a fresh financial start, when exploring bankruptcy options.

Who Can File for Chapter 7

-You must have a official or legal residence in the US

-Have a Place of business in the US or own property in US

-A non US Citizen, can file a bankruptcy petition as long as he or she satisfies at least one of the above requirements

-You must not have been granted a Chapter 7 discharge within the last six years or completed a chapter 13 plan. If you are in the process of filing a chapter 13 you can cover it to chapter 7.

-You must not have had a bankruptcy filing dismissed in the last 180 days.

-Your current monthly income (average income over the last six months before you file) is less than or equal to the median. If it is more you must take the means test.

-It has been over 8 years since you have previously filed and qualified for Bankruptcy.

Bankruptcy Law Changes to look at when trying to get approved for Chapter 7
Under the old law most people would file bankruptcy under Chapter 7. The new law prohibits people in a higher income level from filing under chapter 7. Your current monthly income level measured against the median income for your household of your size in your state will come into play here.

Your income:

Less than or equal to the median-You can file for bankruptcy.
More than the median-you must pass the means test


The means test is to figure out your disposable income. Certain allowable expenses that are determined by IRS guidelines are subtracted from your income. The value of that number will give you your disposable income.

3 things to look at when you arrive at your disposable income number

-If it is less the $6000 over the next five years you will be qualified for Chapter 7.

-If it is greater than $10,000, you can only file, you can demonstrate special circumstances.

-If you are between $6,000 and $10,000 a second calculation is done. This one will compare your disposable income over the next five years to a percentage of your unsecured debt. (This will show if any repayment to your creditors is possible) If it is less than 25% of your unsecured, non-priority debts, you will qualify.

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