Ineligibility Reasons for Chapter 7

There are several criteria for filing for Chapter 7 bankruptcy, and if you’re struggling financially and considering filing a petition, it’s helpful to understand how these criteria apply to you and whether you are eligible before beginning the process.

– Income – First, you must measure your currently monthly income compared to the median monthly income for your family size in the state of Illinois. You may file for Chapter 7 if your income is less than or equal to the median income, and if it exceeds the median income, you must take a “means test” which determines whether your disposable income (after subtracting certain expenses and necessary debt payments) is sufficient to repay at least some unsecured debt in a repayment period of five years.
– Prior discharge or dismissal – You cannot file a second time for Chapter 7 bankruptcy if you have already received a Chapter 7 discharge in the past eight years. You also may not file if a previous Chapter 7 filing was dismissed in the past 180 days due to a fraudulent filing, violated court order, or request for dismissal after a creditor requested relief from your automatic stay.
– Fraud – Certain activities within one year prior to filing may be considered fraudulent and cause for dismissal, such as hiding assets from creditors by “giving” them to friends or relatives, accruing debt for luxury items which you could not afford, concealing money or property from a spouse during divorce proceedings, or lying about debts or income on a credit application.

If you are struggling financially and considering filing for Chapter 7 bankruptcy, you’re not alone. Contact an experienced bankruptcy attorney today for a free consultation.