50k CREDIT CARDS FORCLOSUE PENDING $30K 2 ND TRUST DEED REAL ESTATE INCOME SPASMOTIC RENTALS PAYING 1ST TD
Income criteria established by bankruptcy law determine which debtors may file for Chapter 7 bankruptcy. In order to qualify under income guidelines, a filer's income must be equal to or fall below the median income in the filer's state. Every state has different income guidelines. A filer that falls within a state's income criteria may file for Chapter 7.
However, if the filer's income is above the state's median, the bankruptcy court will require the filer to take a "means test" in order to establish eligibility for Chapter 7. The means test prevents filers with the ability to repay creditors from discharging debt. The means test assesses the filer's debt and income from the preceding six months. If the debtor has a certain amount of income leftover every month after paying creditors, the debtor will fail the means test. Although the debtor is ineligible for Chapter 7, Chapter 13 is an option. A Chapter 13 bankruptcy allows the debtor to repay creditors in a five-year repayment plan.
Who is Ineligible for Chapter 7 Bankruptcy
Under Chapter 7 bankruptcy rules, a debtor is ineligible under the following circumstances:
A previous debt was discharged within the past eight years under Chapter 7;
A previous debt was discharged within the past six years under Chapter 13;
Their income, expenses and debt would allow for a Chapter 13 filing;
The debtor attempted to defraud creditors or the bankruptcy court; or
The debtor failed to attend credit counseling.