Chapter 7 Bankruptcy Requirements
Chapter 7 bankruptcy is a great way for honest debtors to get a second chance. Unfortunately, there is also much potential for abuse by those simply seeking to avoid their financial obligations. That is why bankruptcy law imposes limits on who is eligible for Chapter 7 Bankruptcy. Long Island Chapter 7 bankruptcy lawyers can tell you whether or not you are eligible.
Who can file for Chapter 7 bankruptcy?
- Both individuals and corporate entities, such as partnerships and corporations, can file for Chapter 7 bankruptcy
- Chapter 7 bankruptcy is available without regard for the amount of debt or whether the debtor is solvent or insolvent
If you are filing for bankruptcy in Long Island, approach a bankruptcy lawyer in Long Island, considering that it is tough for an individual to go through the legal processes without expert help.
Who cannot file for Chapter 7 bankruptcy?
- A debtor is ineligible for Chapter 7 bankruptcy if a court dismissed a previous bankruptcy petition in the last 180 days after the debtor willfully failed to appear at court proceedings or comply with court orders
- A debtor is ineligible for Chapter 7 bankruptcy if he or she voluntarily dismissed a previous bankruptcy petition within the last 180 days after his or her creditors petitioned the court to recover property subject to liens
- A debtor is ineligible for Chapter 7 bankruptcy if he or she has not received approved credit counseling within the last 180 days unless special circumstances apply
- A debtor is ineligible for Chapter 7 bankruptcy if his or her monthly income is high enough that granting bankruptcy would be abusive under the Means Test
The Means Test
The Means Test is a complicated test used to determine if a debtor has income and resources such that granting discharge in bankruptcy would be a presumptive abuse of the bankruptcy law.
The court applies the Means Test if the debtor has a current monthly income in excess of the median monthly income in the state where the debtor filed for bankruptcy. Current monthly income is determined by averaging the monthly income the debtor received over the six months prior to filing for bankruptcy. This amount does not include social security income.
If the Means Test must be applied, the court determines the aggregate current monthly income enjoyed by the debtor over the last five years. If it is more than $11,725 or 25 percent of the unsecured debt the debtor carries, the court presumes that granting Chapter 7 bankruptcy would be an abuse of the bankruptcy law. The court will then either dismiss the petition or, with the consent of the debtor, convert it to a petition for Chapter 13 bankruptcy.
Even if the court presumes that granting relief would be an abuse of the bankruptcy law, the debtor has an opportunity to refute this presumption by showing special circumstances. The Long Island bankruptcy lawyers at the Law Offices of Kyle Norton, P.C. have dealt with this type of case before and know what the court looks for when considering special circumstances.
Contact us
For effective, professional advice and assistance when facing bankruptcy in New York and throughout the process, you need an experienced lawyer who is knowledgeable about all of the provisions of the law and who genuinely wants to help. Call our emergency legal hotline at 877-871-6179 or contact the Law Offices of Kyle Norton, P.C. online for a free consultation.
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March 10th, 2012 - 00:27
My chapter 7 was dismissed because I was ineligible to be a debtor. Is the 180 days start from the dat of filing of dismissal