Not all Californians are comfortable with the idea of filing for bankruptcy. Though it is often stigmatized, bankruptcy is an effective and legal method of taking control of one's debts and starting down a strong path to financial stability. Individuals who elect to pursue bankruptcy often choose either Chapter 13 bankruptcy or Chapter 7. This post will generally discuss the requirements that a person must meet to file for Chapter 7.
Chapter 7 bankruptcy is only for individuals and certain types of businesses. It mandates that filers satisfy a means test if their monthly income is greater than the median income of individuals who live in their state. If a debtor does not satisfy the requirements of the means test, then their Chapter 7 case may be converted to a Chapter 13 case. The computation of the means test is complex and readers are advised to discuss their capacities to pass it with their bankruptcy attorneys.
If a debtor qualifies for Chapter 7 under the means test they must also satisfy credit counseling requirements in order to see their case move forward. There are limitations on filing as well if a debtor has had a previous bankruptcy discharge or dismissal within the statutorily prescribed limits. These and the other possible requirements that debtors may face as they file for Chapter 7 bankruptcy are intended to protect the integrity of the proceedings and provide relief to honest debtors.
Moving a case through the Chapter 7 bankruptcy process requires diligence. If a debtor fails to abide by the terms of their case then they may see their matter dismissed without the discharge that they so desperately need. Legal assistance often helps debtors stay on track with the many elements that they must meet in order to reach the end of the Chapter 7 process.