When Virginia residents are struggling with large amounts of debt, they may consider filing for bankruptcy. There are several different forms of bankruptcy, but Chapter 7 is the type most often recommended for individuals who wish to discharge debt. Although this is a popular form of bankruptcy, there are certain eligibility requirements that must be met to begin the process. Understanding these requirements can be helpful when filing for bankruptcy.
Individuals, businesses or corporations are allowed to file for Chapter 7 bankruptcy. The first eligibility requirement that must be met in order to file Chapter 7 is an assessment of income known as a “means test.” The court will check the applicant’s current monthly income to determine if it is greater than the state median income. If the income is too high, the means test will be applied to determine if the applicant is truly unable to repay their debts.
The next eligibility requirements involve an individual’s history regarding bankruptcy. Any person who has had a previous bankruptcy case dismissed, either voluntarily or involuntarily, in the 180-day period before filing for Chapter 7 will not be eligible. Also, any person who has received credit counseling from an approved credit counseling agency within the 180-day period prior to filing will be ineligible.
Chapter 7 bankruptcy provides a way for people to discharge debts and get a fresh financial start. Filing for Chapter 7 can stop creditor harassment and does not require setting up a payment plan. An attorney may be able to answer questions about bankruptcy and help a client examine their finances to determine if bankruptcy is the best choice.
Source: US Courts, “Chapter 7 Eligibility“, December 16, 2014