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While filing for bankruptcy can provide relief from certain kinds of debts, that relief isn't always available to everyone. There are different types of bankruptcy filings available to individuals and each has its own requirements that need to be met first.
For example, Chapter 7 bankruptcy, often referred to as "liquidation" or "straight bankruptcy" may allow you to get rid of most of your debts and start over with a clean slate, but first you must qualify for Chapter 7 by meeting certain criteria. Here are the debt and eligibility requirements for filing Chapter 7 bankruptcy.
While there is no minimum amount of debt required in order to file for Chapter 7 protection, you will need to demonstrate an inability to pay your debts. Perhaps the biggest factor in your ability to repay your creditors is your income. If your monthly income -- including wages, salary, tips, bonuses, overtime, and commissions; gross income from a business, profession, or a farm; interest, dividends, and royalties; or rents, real property income, and income from other sources -- is equal to or below the state monthly median where you live, you may file for Chapter 7.
If your monthly income exceeds the state median, you may still qualify for Chapter 7 if you can demonstrate that your disposable income -- what you have left over after paying "allowed" monthly expense like rent and food -- is not enough money to pay your unsecured creditors through a Chapter 13 repayment plan.
Certain other factors will disqualify you from Chapter 7 eligibility. You may not be able to file for Chapter 7 if:
Filing for bankruptcy can be a complicated procedure -- contact an experienced bankruptcy attorney for help.