Do I Qualify to File Chapter 7 Bankruptcy?
There are limitations to filing Chapter 7 bankruptcy. You may not file if you obtained a discharge in a Chapter 7 case within the past eight years, or in a Chapter 13 case within the past four years. There are some other specific reasons you cannot file, but those are rarely applicable. These are if you have been previously dismissed within the last 180 days for fraud, by court order or voluntary dismissal after a Motion for Stay Relief was filed by a creditor.
You will first need to determine your average monthly income during the six months before filing. This is based on the median income for the county you live in. For example, if you live in Phoenix, Arizona, you have to use Maricopa County’s median monthly income. If you live in Tucson, you have to use Pima County, Arizona, etc. If it is at or under the median income for your county, you are allowed to file under Chapter 7. However, if you are above the median income, you need to move on to a second step of calculation, known as the means test unless you qualify for one of two exceptions.
The median income for Arizona can be found at the United States Trustee’s page and are updated quarterly.
The means test uses a standard form to compare your income to your debts, and determine if you have sufficient disposable income to at least pay part of your unsecured debts over a five-year period. If you have such disposable income, you will be required to file for a Chapter 13 bankruptcy or Chapter 11 if your debts are too high for Chapter 13.