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What things can disqualify a person from Chapter 7 bankruptcy?

There are some bankruptcy and debt relief options a given person who is facing difficulties with debt might not have access to. This is because some options have strict eligibility requirements attached to them. An example of this can be seen in Chapter 7 bankruptcy. There are several different things that could make a debtor ineligible for receiving Chapter 7 bankruptcy protection.

One such thing is their bankruptcy discharge history. Under bankruptcy law, a person cannot get a Chapter 7 bankruptcy if they have had debt discharged under a Chapter 13 or Chapter 7 bankruptcy within a certain time period. The time period is the previous six years when it comes to debt discharged through Chapter 13 bankruptcy and the previous eight years when it comes to debt discharged through Chapter 7 bankruptcy.  

Another thing that can impact a person’s eligibility for Chapter 7 bankruptcy is their income level. If a person’s income is above a certain level (their state’s median income level) and they fail a means test, they will generally be deemed ineligible for such a bankruptcy. 

Some other examples of things that can disqualify a person from being able to receive a Chapter 7 bankruptcy are failing to go through credit counseling, having attempted to commit fraud against the bankruptcy court or having attempted to commit fraud against a creditor.

When one is losing a battle against high debt, making well-informed debt relief decisions can be very important. One thing that can be a major part of being well-informed when it comes to such decisions is understanding what debt relief options one does and does not have access to. Thus, having a discussion regarding debt relief eligibility with a lawyer experienced in the areas of debt relief and bankruptcy is something individuals with debt problems may want to consider. 

Source: FindLaw, “Chapter 7 Bankruptcy Rules Overview,” Accessed April 10, 2015

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