Boston Bankruptcy Attorney

Chapter 7 Eligibility

Chapter 7 Bankruptcy, or liquidation, is typically the easiest, least complicated form of bankruptcy available. When the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) went into effect, however, qualifying got a lot more difficult.

Under BAPCPA, a person must pass a "means" test in order to qualify for Chapter 7. The "means test" is how the Internal Revenue Service, or IRS, determines who can or cannot file for Chapter 7 Bankruptcy. The income and expenses of a household are examined in great detail to see how they compare to the standard of the area as set by the IRS. If a person earns less than the median income for a family of comparable size in the state, that person can automatically file for Chapter 7 bankruptcy.

However, if a family's income from the last six months is greater than the median income and the family has the means to pay a minimum of $6,000 over five years (the equivalent of $100 a month) towards their debt, that family is not allowed to file for Chapter 7 bankruptcy. These families will be forced to file for Chapter 13 bankruptcy instead.

One portion of the means test requires the debtor to file any overdue tax returns within a few weeks of filing for Chapter 7. In addition to passing the "means test," anyone wanting to file for bankruptcy must receive approved credit counseling and a budget analysis, at his or her own expense.

Contact a Boston Bankruptcy Lawyer

If you are considering filing for bankruptcy and are unsure about your eligibility for Chapter 7, contact the Boston bankruptcy lawyers of Joshua Spirn & Associates at 1-800-975-5346 to discuss your situation and to determine if bankruptcy is right for you.