If you are struggling with debt and wondering what is required to qualify for bankruptcy, you are not alone. Millions of people face financial challenges every year and need a fresh start. Filing for bankruptcy can feel complicated, but understanding the requirements, the process, and your options is the first step toward relief. At DEH Law, we guide clients through the entire process, from understanding bankruptcy basics to filing under Chapter 7 or Chapter 13.
Bankruptcy is not a one-size-fits-all solution. The type of bankruptcy you choose depends on your income, debts, and long-term financial goals. Knowing the requirements for filing and understanding the bankruptcy code can save you time, stress, and even money. Let’s break down what you need to know.
Before diving into specific requirements, it’s helpful to cover some bankruptcy basics. Bankruptcy is a legal process that allows individuals or businesses to relieve some or all of their debts under the protection of the bankruptcy court.
So, what is required to qualify for bankruptcy? There are different types of bankruptcy, but the most common for individuals are Chapter 7 bankruptcy and Chapter 13 bankruptcy.
Understanding the difference is key because the requirements for qualifying differ for Chapter 7 and Chapter 13.
To qualify for bankruptcy, there are several steps and requirements. These are designed to make sure that bankruptcy is appropriate for your financial situation.
Your first step is to gather all information about your debts and your monthly income. For Chapter 7, the court uses a chapter 7 means test to determine if your income is low enough to qualify. The test compares your current monthly income to the median income in your state.
For Chapter 13, eligibility is based on having a regular income that allows you to make payments under a chapter 13 repayment plan. There are also limits on the amount of unsecured and secured debt you can have in a Chapter 13 case.
Once you know which type of bankruptcy may work for you, you will need to fill out official bankruptcy forms. These forms include detailed information about:
Completing these forms accurately is crucial. The bankruptcy court will use this information to determine your eligibility and may appoint a bankruptcy trustee to oversee your case.
For Chapter 7, one of the most important steps is the chapter 7 means test. This test ensures that only those who genuinely cannot pay their debts qualify for chapter 7 relief.
Passing the bankruptcy means test is essential because it determines whether a Chapter 7 discharge is possible.
Even if you pass the Chapter 7 means test, not all debts may be dischargeable. You will need to review any secured debt, such as:
Some secured debts may require you to continue payments to keep the property. For Chapter 13, your chapter 13 plan will include structured payments toward secured debts, giving you the advantage of keeping key assets while managing other obligations.
Before filing, the bankruptcy code requires that you complete a credit counseling course from an approved provider. This course helps you understand your options, whether it’s filing Chapter 7 or Chapter 13 bankruptcy, negotiating debts, or creating a debt management plan.
After your bankruptcy case begins, you must also complete a debtor education course to receive a full bankruptcy discharge.
While Chapter 7 can quickly discharge debts, some people benefit more from Chapter 13 bankruptcy instead. Chapter 13 is better than Chapter 7 in certain situations:
A chapter 13 repayment plan spreads payments over three to five years, and upon successful completion, you may receive a chapter 13 discharge for remaining debts.
Navigating bankruptcy can feel overwhelming, but DEH Law makes it manageable. Here’s why we are the right partner:
Clients often tell us that our clear explanations and hands-on support remove the fear from filing bankruptcy under Chapter 7 or Chapter 13.
The key takeaway is that qualifying for bankruptcy is about understanding your income, debts, and the rules of the bankruptcy code. By following the steps above, you can determine if you are eligible, complete the proper forms, and pass tests like the chapter 7 means test.
Remember, each case is unique. A qualified bankruptcy attorney can help you navigate the process, avoid mistakes, and maximize your chances of a successful bankruptcy discharge. Whether Chapter 7 or Chapter 13 is the right choice, knowing what is required to qualify for bankruptcy is the first step toward financial relief and peace of mind.
Do I automatically qualify for Chapter 7 if my income is low?
If your income is below your state’s median, you may qualify. The court will also look at your expenses to make sure you cannot pay your debts.
What happens if I don’t pass the Chapter 7 means test?
You may have to file Chapter 13 instead. Chapter 13 lets you pay debts over time while keeping your property.
Do I have to take a course before filing for bankruptcy?
Yes. You must complete a credit counseling course before filing. You also need a debtor education course after filing to get a full discharge.
Can I qualify if I filed bankruptcy before?
You may qualify, but there are waiting periods. For example, you usually must wait eight years to file Chapter 7 again.
Are there debt limits for Chapter 13?
Yes. Your debts must be below certain limits set by law. These limits change over time, so check with an attorney.
If you’re unsure about what is required to qualify for bankruptcy, don’t wait to get clarity. Contact DEH Law today to speak with an experienced bankruptcy attorney who can guide you step by step. Call (214) 234-0529.
Also read:
Is It Hard To Get Bankruptcy Approved?