Most of the confusion regarding who qualifies and who doesn’t is based on the so-called “reform” of the Bankruptcy Code back in 2005. People come to my office, or call me on the phone, figuring that they probably can’t file for bankruptcy due to the changes in the “new” bankruptcy law.
Most of the time, they’re wrong. Most people who contact me are able to file a Chapter 7 bankruptcy. Here’s what I ask to see if they qualify:
Have you filed a Chapter 7 Bankruptcy case within the last eight years? If so, did you receive a discharge? If you answer “Yes” to both questions, you’ll have to wait until eight years have passed from the filing date of the previous Chapter 7 case in order to file another one.
If you haven’t filed a Chapter 7 case within the last eight years, then you might be able to file one now.
It will depend on how much money you’ve made in the last six months. It’s kind of complicated, but, in general, if your gross income during the previous six months, multiplied by two, is less than the median annual income for a family of your size in your state, then you’ll qualify to file a Chapter 7.
Here in Colorado, the median annual incomes, effective November 1, 2011, are as follows:
Household of one: $47,361.00
Household of two: $62,431.00
Household of three: $69,252.00
Household of four: $79,905.00
Household of five or more: Add $7,500.00 for each person more than four.
If your annual income, based upon the last six months, is less than the amounts above, then you’ll be able to file a Chapter 7.
What if your income is more than the median? Then we must complete the Means Test in order to find out if you’ll qualify. It can be a complicated process, but many people who never thought they’d qualify end up passing the Means Test.
There are other ways that you may qualify for filing a Chapter 7 case, without having to jump through the hoops of the Means Test: If the majority of your debt is “non-consumer” debt, or if you are or have recently been a member of the armed forces, then you may not have to bother with the Means Test.
Other, non-Colorado Springs Bankruptcy Lawyers have also written about Bankruptcy “Q” words: