The simplest and quickest form of bankruptcy is Chapter 7. It is available to individuals, married couples, corporations and partnerships. In Chapter 7 bankruptcy the debt of the person filing (called the debtor) is discharged. A bankruptcy discharge means that the debtor does not owe the debts by operation of law and all collection efforts must stop. Any assets that are not exempt are sold. Most debtors have assets that will be exempt. Most debtors get to keep most of their property and discharge their debt.
A debtor has to qualify for Chapter 7 Bankruptcy. To qualify for bankruptcy the debtor must pass the bankruptcy means test. You do not have to be penniless to qualify for a chapter 7 discharge. While the means test is designed to limit the number of people that can file for a chapter 7 discharge, it does consider your specific circumstances, including your debt and actual living expenses calculated over the last 6 months. The means test also considers the median income levels, which vary by state and household size.
Our bankruptcy attorneys can help you calculate your means test and determine if you qualify for a Chapter 7 bankruptcy. If you don’t qualify, we can help you determine if you should file for a chapter 13 bankruptcy.
Bankruptcy Chapter 7 vs Chapter 13
If you don’t pass the means test for Chapter 7 and qualify for a total discharge, you may still qualify to file a Chapter 13 bankruptcy. There may be reasons to file a Chapter 13 Bankruptcy: