What Are Some of the Requirements for a Chapter 7 Bankruptcy?

Chapter 7 bankruptcy provides individuals with a way to discharge certain types of debt and get a fresh financial start. If you are struggling with overwhelming debt, it may offer a solution. However, before pursuing this option, it’s important to be aware of the specific requirements you must meet in order to qualify. Here, we’ll review the key criteria for filing a Chapter 7 bankruptcy in Greenville, SC.

Income Eligibility: Passing the Means Test

One of the primary requirements for Chapter 7 bankruptcy is passing the means test. The means test determines whether your income is low enough to qualify for Chapter 7 or if you may need to file for Chapter 13 bankruptcy instead. The test compares your average monthly income over the past six months with the median income for a similar household size in South Carolina. If your income falls below the median, you are likely eligible to file for Chapter 7.

Asset Evaluation: Understanding Exempt and Non-Exempt Property

Another critical factor in Chapter 7 bankruptcy is the evaluation of your assets. While Chapter 7 is designed to eliminate your debts, it also requires an examination of your property to determine which items can be sold to repay creditors. South Carolina offers exemptions that allow you to keep certain types of property, such as a portion of the equity in your home or car. Non-exempt assets may be liquidated to pay off your debts.

Credit Counseling: A Mandatory Step Before Filing

Before you can file for Chapter 7 bankruptcy, you must complete credit counseling from an approved agency. The counseling session will help assess your financial situation and explore alternative options for handling your debts. This step is required by law and must be completed within 180 days before filing for bankruptcy. The counseling is designed to ensure that you have explored all options for resolving your financial issues.

Filing Fees and Paperwork: The Administrative Requirements

When filing for Chapter 7 bankruptcy, you will need to submit a variety of documents, including proof of income, tax returns, and a detailed list of your assets and debts. Additionally, there is a filing fee that must be paid to the court. However, if you are unable to afford the filing fee, you may qualify for a fee waiver or payment plan. The paperwork must be completed thoroughly and accurately to avoid delays in the process.

Meeting the requirements for Chapter 7 bankruptcy can be complex, and ensuring that you meet all the criteria is crucial to the success of your case. Seeking legal guidance can help you understand your eligibility, complete the necessary paperwork, and make informed decisions about your financial future. If you are in Greenville, SC, and considering filing for Chapter 7 bankruptcy, reach out to Jason Ward Law, LLC for assistance in evaluating your case.