What is required to qualify for a Chapter 7 bankruptcy filing?

Chapter 7 bankruptcy, also known as no-asset bankruptcy, is a debt liquidation plan which allows a debtor to eliminate most of his unsecured debt. Prior to enactment of the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), debtors generally had the freedom to choose between filing a Chapter 7 or a Chapter 13 case. However, the BAPCPA made it necessary for any debtor wishing to file a Chapter 7 case to pass either the median income or the means test. 

The median income test requires a debtor to demonstrate that his household income is less than or equal to the median income for a household of the same size in his state. If a debtor passes the median income test, he may file a Chapter 7 bankruptcy. However, if a debtor cannot pass the median income test, he must pass the means test in order to qualify for Chapter 7 relief. 

The means test is the standard used to determine whether the filing of a Chapter 7 case amounts to an abuse of the bankruptcy process. There is always a presumption of abuse if a debtor has $166.67 or more in net monthly income available for distribution to general unsecured creditors. Abuse is never presumed if a debtor has less than $100 available for distribution to general unsecured creditors.  

If you are considering filing a Chapter 7 bankruptcy, you should consult with a qualified bankruptcy attorney in your area. A bankruptcy attorney can run the numbers and advise you whether you qualify for Chapter 7 relief.