How Do You Qualify for Chapter 7?
For a debtor to qualify to file Chapter 7 Bankruptcy, the debtor must qualify under one of a couple of different tests. The first test is whether the debtor earns less than the median income as set for the county in which the debtor resides. How this amount is determined is based on the size of the debtor's household. The more people in the household, the higher the income limits. How the income is calculated is based on the debtor's income the 6 full months prior to the bankruptcy filing date. For example, if the debtor files bankruptcy on July 15, the debtor's gross income from all sources for the months January through June are added together and multiplied by 2. This will determine the annual gross income for the debtor. If this amount is less than the median income as set for the debtor's county and size of household, then the debtor qualifies to file Chapter 7 Bankruptcy. However, if the annual gross income amount is over the median amount, then in order to file Chapter 7 Bankruptcy, the debtor must pass the "Means Test."