Filing for Chapter 7 bankruptcy starts by seeing if you qualify first. Federal law requires Maryland applicants to prove a monthly or annual income by passing a means test. The qualification process is not all that difficult, so many applicants do qualify after meeting a few basic requirements.
The means test
To qualify for Chapter 7 bankruptcy, you need to pass the means test. This test is used to determine if your income is too high or too low to apply for this form of relief. If your income falls below the average household income in your state, based on a specific household size, you qualify and pass the test. Generally, bankruptcy courts look for lower-end incomes, and you do not qualify if you can immediately repay most of your debts.
You cannot show a history of filing multiple times for bankruptcy. You cannot have filed for bankruptcy within the past six or eight years, depending on the chapter. Also, you cannot have filed for bankruptcy and had your petition dismissed within the past 180 days due to lack of compliance with the court or voluntary dismissal on your part. You cannot have a history of committing fraud against your creditors. Overall, a filer must show a need for financial assistance.
Determining eligibility is the first step of filing for Chapter 7 or 13 bankruptcy. You have to meet the state’s income requirements that vary based on household size. There are additional requirements of proving that you have not filed several years before and you’re capable of repaying your debts.