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Eligibility for Chapter 7 Bankruptcy

Chapter 7 Bankruptcy Information Provided by our Lawyer

Due to the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, changes have been made to bankruptcy laws that make it harder to file for Chapter 7 bankruptcy. Are you qualified to file for this type of bankruptcy? Talking to a Chapter 7 bankruptcy lawyer at the Law Firm of Kevin D. Judd can help determine your eligibility in Maryland or Washington DC. We offer a free, initial phone consultation.

Struggling with debt? Contact us today at (202) 888-8454 for a free consultation and find out if Chapter 7 bankruptcy is right for you!

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.

Chapter 7 vs. Chapter 13 Bankruptcy

Understanding the differences between Chapter 7 and Chapter 13 can help you choose the best option:

Chapter 7 Bankruptcy:

  • Discharges most unsecured debts in about 3-6 months.
  • Requires selling some non-exempt assets.
  • Best for those with low income and few assets.

Chapter 13 Bankruptcy:

  • Sets up a repayment plan over 3-5 years.
  • Allows you to keep all assets.
  • Best for those with a steady income who can repay some debts.

Each option has pros and cons. Talking to a bankruptcy attorney can help you decide which is right for you.

What is the Bankruptcy Means Test?

“The bankruptcy means test” examines your income and helps you decide if you would be able to afford a payment plan that is usually agreed upon with Chapter 13 bankruptcy. You must also subtract particular debt payments and allowances before coming to a conclusion. If, after subtracting that money, you are still not able to pay through a payment plan, you may file for Chapter 7 bankruptcy.

Frequently Asked Questions (FAQ) About Chapter 7 Bankruptcy

Will I lose all my belongings if I file for Chapter 7?

  • No, most people who file for Chapter 7 can keep essential assets like their home, car, and personal belongings. Bankruptcy exemptions protect certain property, but luxury items may not be covered.

How long does a Chapter 7 bankruptcy stay on my credit report?

  • A Chapter 7 bankruptcy remains on your credit report for 10 years, but that doesn’t mean you can’t rebuild your credit. Many people start improving their credit within a year or two by using secured credit cards and making on-time payments.

Can filing for Chapter 7 stop wage garnishment?

  • Yes! Filing for Chapter 7 immediately stops wage garnishment in most cases. Once your bankruptcy is filed, creditors must stop all collection efforts, including garnishing your wages.

Do I have to go to court for Chapter 7 bankruptcy?

  • You usually won’t have to appear in a traditional courtroom, but you must attend a Meeting of Creditors (also called a 341 meeting). This is a short meeting with the bankruptcy trustee and any creditors who choose to attend.

Can I include student loans in my Chapter 7 bankruptcy?

  • Generally, student loans cannot be discharged in Chapter 7 unless you prove extreme financial hardship. This is difficult but not impossible. An attorney can help determine if you qualify for an exception.

Will my spouse’s credit be affected if I file for bankruptcy?

  • If you file individually, it should not impact your spouse’s credit. However, if you have joint debts, your spouse may still be responsible for repaying them.

Can I apply for new credit after filing for Chapter 7?

  • Yes, but it may take time. Some lenders offer secured credit cards or small loans to help rebuild your credit. Responsible borrowing and on-time payments will help improve your credit score.

Need legal guidance? Contact us online or call (202) 888-8454 to speak with an experienced bankruptcy attorney.

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Free Consultation to Discuss Chapter 7 Eligibility in Washington DC or Maryland

Qualified attorney Kevin D. Judd can answer any questions you have about Chapter 7 eligibility. Our lawyer can provide you with Chapter 7 bankruptcy information during a free, initial phone consultation, which can help you decide what to do next. Our law firm is here for you and your family.

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