The federal government has taken steps in recent years to make it more tedious for debtors to qualify for Chapter 7 bankruptcy. This was done to ensure that Chapter 7 bankruptcy is only used by those who are truly incapable of repaying their creditors, since it allows for a full liquidation of debts. Debtors are now required to pass the "means test" before they can receive this type of bankruptcy protection. The means test calculates the debtor's monthly income and determines whether or not it is below the state median (based on their household size).
If it isn't, the debtor may still be able to qualify for Chapter 7 bankruptcy if his or her disposable income is below a designated amount. Individuals who are not eligible for a Chapter 7 filing may be able to file for Chapter 13 bankruptcy. Furthermore, there may be certain debtors who do qualify for Chapter 7 but who should not file for this type of bankruptcy because of certain factors, such as a risk of losing too much property through liquidation. It is best to consult with a skilled legal professional before moving forward with any bankruptcy filing.
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