Qualifying for Bankruptcy: Means Test

• Not every debtor can qualify for Chapter 7 bankruptcy. To qualify, a debtor must pass the means test. The means test compares a filer's average monthly income during the six months preceding filing for bankruptcy with the median income in the filer's state. If a filer's income is equal to or less than the state median income, the filer can file for Chapter 7. A filer who earns more than the median income must pass the means test to qualify.
  
  

Qualifying for Bankruptcy: Prior Bankruptcies

• A debtor may be ineligible for bankruptcy if he previous sought bankruptcy protection. A debtor is ineligible under Chapter 7 bankruptcy if a debt was discharged under Chapter 7 within the past eight years or under Chapter 13 if a debt was discharged within the past six years. A debtor is ineligible for Chapter 13 if a debt was discharged under Chapter 13 within the last two years or under Chapter 7 within the last four years.
  
  

Bankruptcy Costs and Required Forms

• Before filing for either a Chapter 7 or a Chapter 13 bankruptcy, a debtor must receive credit counseling. After counseling, a debtor will have to pay $299 to file for Chapter 7 and $274 to file for Chapter 13. Both types of bankruptcies require filling out forms regarding property, debt, income, expenditures, creditor holdings of secured and unsecured debt, and a statement of financial affairs. A Chapter 13 bankruptcy requires a repayment plan, and a Chapter 7 bankruptcy requires a means test calculation.
  
  

Automatic Stay

• After a debtor files for bankruptcy, the court automatically enters a stay. An automatic stay stops all collection activities during the bankruptcy process. Creditors are prevented from filing lawsuits against the debtor, and any pending lawsuits are prevented from proceeding. Creditors are also prevented from recording liens against the debtor's property, reporting debt to credit reporting agencies and seizing the debtor's property or income.
  
  

The Creditors Meeting

• In both a Chapter 7 and a Chapter 13 bankruptcy, the court orders a creditors meeting after the paperwork is filed. A trustee conducts the meeting in order to gather more information and documentation from the debtor. A debtor who fails to attend the meeting will likely have his or her case dismissed. After the meeting, if all appropriate paperwork is filed and there are no issues in dispute, a judge in a Chapter 13 case will confirm the repayment plan at a confirmation hearing. In the case of a Chapter 7 bankruptcy, a court will issue a discharge order a few months after the discharge hearing.