What Disqualifies You from Filing Bankruptcies

Are you interested in what disqualifies you from filing bankruptcies? It can be a complicated subject. Bankruptcy law is one of the most complex areas of the law, so you shouldn’t take it lightly. That’s why Bruner Wright is here to help! With the help of our Florida bankruptcy lawyers, you’ll have a better idea of if you are able to file for bankruptcy. Let’s start!

Chapter 7 Bankruptcy—Who Can’t File?

Chapter 7 bankruptcy is possible for almost any individual or company who owns property in the United States or has a permanent residence here. You must fulfill several requirements before you are eligible for a discharge – the order that eliminates qualifying debt.

If you are an individual filing for consumer bankruptcy, your income must meet the “means test“, unless you are a qualified disabled veteran, or your debts arise primarily from the operation and management of a business. If you file a bankruptcy in the past within a specified period, or if you are cheating your creditors, the court may dismiss your case. You must also be a natural person. An incorporated entity cannot receive a Chapter 7 debt discharge. Here are the reasons that disqualifies you from filing bankruptcies.

You Have Enough Income to Pay Your Debts

Clear rules govern bankruptcy. They dictate who can get a Chapter 7 bankruptcy discharge and who must pay into a three to five-year Chapter 13 repayment plan. These are some of the requirements that you will need to comply with.

1. How High Is Your Income?

To determine whether you are eligible to file for Chapter 7 bankruptcy, the first step is to compare your “current monthly income” with the median income of a family of your size in your state. Your “current monthly income”, is the average of your income for the six months prior to filing. If you reside in Florida, here’s a complete guide on Chapter 7 Bankruptcy: Florida Means Test Calculator.

If your income is below or equal to the median, we can assume that you are eligible to file for Chapter 7 bankruptcy. To file for bankruptcy, your income must be less than the median.

2. Are You Able to Repay Some of Your Debts With Enough Disposable Income?

The means test measures your disposable income. This is the amount of your monthly paycheck after deducting some allowed expenses and debt payments. It determines if you have enough money to repay at least a portion of your unsecured debts within a five-year repayment period. Unsecured debts refer to obligations that are not backed by collateral, such as credit card balances or medical bills.

3. Are You Able to Save Money Each Month?

The trustee will also review other paperwork to determine if you are able to repay creditors. Your bankruptcy schedules, which are different from the means test, provide a snapshot of your actual income and expenditures.

The trustee will examine Schedule I: Your Income, and Schedule J: Your Expenses. The trustee will recommend to the court that your case be converted to Chapter 13 if the net amount indicates that you have enough money each month to make meaningful monthly payments to creditors.

For more information about whether you are eligible for Chapter 7 bankruptcy, please see How to File a Chapter 7 Bankruptcy in Florida.

A Bankruptcy Discharge Was Previously Granted

If you have a Chapter 7 bankruptcy discharge within the past eight years or a Chapter 13 bankruptcy discharge within the last six years, you can’t obtain another Chapter 7 bankruptcy discharge.

Your Bankruptcy Was Discharged By the Court Within the Last 180 Days

If a Chapter 7 or Chapter 13 bankruptcy case has been dismissed in the last 180 days, you can’t file Chapter 7 because of the following reasons:

  • You have violated a court order.
  • The court ruled that you filed fraudulently or in violation of the bankruptcy system.
  • After a creditor requested relief from the automatic stay, you asked for the dismissal.

You Defrauded Your Creditors

If you are accused of cheating creditors or hiding assets, a bankruptcy court may dismiss your case.

Some activities may be flagged by the trustee and court. The court may dismiss your bankruptcy case if you have engaged in any of these activities within the last year. These are some actions you can expect the trustee will closely scrutinize:

  • Selling assets to friends and family for less than fair market value.
  • When you didn’t have the money to pay it off, you piled up debts on luxury goods.
  • Hiding money or property from your business partner.
  • On a credit application, you lied about your income and debts.

You must also sign bankruptcy papers under the penalty of perjury and affirm that they are true. If you intentionally fail to disclose property or omit financial information or use a false Social Security number (to conceal your identity as a previous filer), the court may dismiss your case.

Bruner Wright Can Help With Your Bankruptcy Process

We hope this article has given you some clarifications on what factors can disqualify you from filing bankruptcies. One of the first steps in figuring out if you can file for bankruptcy is to see if you are qualified to do so. Qualifying factors include your income, property, and expenses.

If you are questioning whether or not you qualify as well as whether or not you should file bankruptcy proceedings, be sure to seek the assistance of an experienced bankruptcy attorney like those at Bruner Wright P.A. 

Bruner Wright P.A. has decades of extensive legal experience that can help you get back on firm financial footing. Our team is standing by to give you the support you need to make today the first day of your life without debt. Contact us today for more information!