Back in 2005 the bankruptcy laws changed, they made some aspects of bankruptcy a littler harder to qualify for. Chapter 7 was one where individuals had to qualify and each state had their own mandates. In a minute you will see what changes were enacted and how they affect filing for bankruptcy.
It use to be almost any income level could file for chapter 7 bankruptcy, but now that has changed. The credit card lobbyists have fought hard for many years to get these changes. In 2005 they finally got their wish. It wasn't as bad as some thought it would be.
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Lets look at the major changes that affect chapter 7 bankruptcy:
Financial Class - In the scheme of things this is not the biggest change made, but it's worth mentioning. You have to take a simple budgeting class (online). When passed you will get a certificate for verification. Income Requirement - This is the biggest change in the law. Each state has a different median income threshold (called "means test"), if you exceed the threshold you cannot qualify for chapter 7. A free consultation with an attorney will tell you what the income level for your state is. Household - The number of people in your household will determine the income limit. The more qualified people in your household, the higher the income limit.
These are the major changes, some minor changes like: length of time before you can file chapter 7 again changed, type of assets and monetary limits changed, laws about abuse of credit changed. For most people these changes don't impact their filing.
Qualifying for Chapter 7 Bankruptcy
If you make under the income requirement (for your state), based on your family size, you qualify for chapter 7. The next question to answer is, do you want to exempt anything from bankruptcy? Some people want to keep their car, you can exempt this from the bankruptcy.
If you want to save your house, you might have to look at chapter 13 bankruptcy, chapter 7 may not work in this case. It's not that you don't qualify, you have assets your saving that don't qualify.
Insolvency is another little talked about way to qualify for chapter 7.
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