Filing for bankruptcy can be a port in the storm for people who are going through a periods of financial instability, and can protect them from being pursued by creditors. There are several different types of bankruptcy depending on the needs of the person or business filing. Chapter 7 and Chapter 13 are commonly filed by individuals, but there are restrictions and regulations regarding each kind. Brent George Law firm can guide you through the process of deciding what bankruptcy options are available.
There are a number of factors that disqualify someone from filing Chapter 7 bankruptcy:
1. Income Is Too High
When someone files for bankruptcy, it is essential to look at his or her income in the period leading up to filing. If the income in the six months prior is over the state median income, Chapter 7 is not an option for the individual. Social security income and tax refunds are not included in the calculation, but the following are taken into account:
- Tips or bonuses
- Child Support payments
- Unemployment or Disability
- Income from rent
Even if the income is at the state median or lower, the person filing can’t file for Chapter 7 if he or she has sufficient money to pay off debts.
2. Debts Were Discharged or a Case Was Dismissed
If the person filing had debts discharged from a bankruptcy case that was filed between 6-13 years earlier, depending on the type of bankruptcy, they are barred from filing again within a certain time frame. In addition, if a previous bankruptcy case was dismissed, particularly if claims were fraudulent, the same person can’t file Chapter 7 bankruptcy.
3. Failure to Participate in Counseling
When someone files for bankruptcy, he or she must undergo mandatory financial counseling to determine if there are other options besides bankruptcy. The only exemptions from the counseling involve physical or mental disability. Failure to go to financial counseling sessions can cause the judge to reject the case.
4. Fraudulent Behavior
If the person may not file for Chapter 7 bankruptcy if he or she:
- Has lied about income or assets
- Spent large sums of money on unnecessary items
- Tried to hide money with relative and friends
- Destroyed property
Some of the above restrictions regarding income may not apply if someone was serving in the armed forces overseas or became unable to pay debts because of running a business. Consult with the Brent George law firm to clarify questions and concerns regarding bankruptcy.