Eligibility for Chapter 7 Bankruptcy

Benefits of Chapter 7 Bankruptcy

Filing for Chapter 7 bankruptcy can provide relief from overwhelming debt. Here are some key benefits:

• Eliminates Unsecured Debts – Chapter 7 allows you to discharge debts like credit cards, medical bills, and personal loans. Once discharged, you are no longer legally required to pay them.
• Stops Creditor Harassment – Once you file, creditors must stop collection calls, wage garnishments, and lawsuits. This gives you peace of mind and financial breathing room.
• Protects Your Home and Car (in Some Cases) – While Chapter 7 does not stop foreclosure or repossession in every situation, some exemptions may allow you to keep your primary residence or vehicle. An attorney can help you understand what assets are protected.

Who Qualifies for Chapter 7 Bankruptcy?

Not everyone qualifies for Chapter 7 bankruptcy. To be eligible, you must meet certain requirements:

• Income Limits – Your income must be below the state median for your household size, or you must pass the means test, which assesses your ability to repay debts.
• Exempt vs. Non-Exempt Assets – Some property is protected under bankruptcy exemptions, like clothing, household goods, and some equity in your home. Non-exempt assets, like luxury items, may be sold to pay creditors.
• When Chapter 7 May Not Be an Option – If you have a high income or significant non-exempt assets, you may need to consider Chapter 13 bankruptcy instead. Also, if you have filed for bankruptcy recently, you may not be eligible.