Unlike Chapter 13 bankruptcy, Chapter 7 bankruptcy discharges all of your debts except for those that are exempt, such as child support payments and student loans. In order to pay off your creditors, your assets may be liquidated and sold to cover a portion of your debt. If you are considering filing for bankruptcy, one of the first things you need to determine is whether filing a Chapter 7 petition is the best solution to your financial problems.
You haven’t already received a bankruptcy discharge
If you have already received a bankruptcy discharge from a Chapter 7 or a Chapter 11 petition in the past eight years, you probably won’t be eligible to file a Chapter 7 petition right now. In most cases, the court will also deny a Chapter 7 petition if you have previously received a discharge under Chapter 12 or Chapter 13 bankruptcy within the past six years.
You cannot meet Chapter 13 financial requirements
In a Chapter 13 bankruptcy case, the debtor is required to pay a portion of the debt through a payment plan. In order for you to qualify for Chapter 7 bankruptcy rather than Chapter 13, your monthly income in the six months prior to your filing date should not exceed the median income for comparable household size in your state.
You are having difficulty securing long-term employment
One of the main reasons why individuals choose to file Chapter 7 petitions is because they don’t have sufficient income to make any monthly payments. If you have been unemployed for a period of six months, you may be eligible for a Chapter 7 bankruptcy procedure.