Debt can be devastating. It can pile up and may seem like something you cannot escape from. However, filing for chapter 7 bankruptcy could give you the breathing room you need to recover your finances and credit score.
Chapter 7 bankruptcy involves the sale of non-exempt assets to pay off debtors. If you are struggling to pay your debts, there are some requirements you need to keep in mind if you wish to pursue this form of relief.
How do I qualify for a bankruptcy filing?
The primary qualifier for a chapter 7 bankruptcy filing is proving that you do not earn enough income to pay off your debts. You must pass the “means test” by having an annual household income that falls below the state median.
The median increases based on the number of earners in a household and readjusts every six months. In Massachusetts, the single-person household median stands at $81,170, as of June 24, 2024, according to the U.S. Department of Justice.
Documentation is essential for bankruptcy qualification
To prove that you are eligible for chapter 7 bankruptcy, you must provide financial statements which show your monthly income. Therefore, you must collect a complete documentation of your assets, debts and expenses. This is essential when calculating your annual household income compared to the state median.
Meanwhile, if you do not qualify for chapter 7 bankruptcy you can still seek other forms of relief. Through Chapter 13 bankruptcy, you can create a repayment plan to make future debt payments more manageable.
If you are dealing with debt, knowing what you need to be eligible for chapter 7 bankruptcy can help you assess your financial options moving forward.