What are the Chapter 7 Bankruptcy Rules?

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In a Nutshell

The Chapter 7 bankruptcy rules are not as difficult to understand as you might believe. Contact our office to discuss how we can help you file for bankruptcy relief. Our mission is to provide no cost bankruptcy services for low-income families.

Written by Attorney Jonathan Petts.  
Updated August 7, 2020

Chapter 7 Bankruptcy Rules

Filing for bankruptcy relief can be frightening, especially if you cannot afford to hire a bankruptcy attorney. However, we want you to know that you can file for Chapter 7 bankruptcy relief without an attorney, even if you are not familiar with the Chapter 7 bankruptcy rules.

Upsolve, a non-profit organization which assists low-income households file for Chapter 7 bankruptcy relief, can help you navigate the Chapter 7 bankruptcy rules so that the process is not as stressful or difficult as you might assume.

Below we will discuss some of the Chapter 7 bankruptcy rules that you will need to know as you work through the process of filing a bankruptcy case. Again, we want you to know that we are here with you to provide assistance so that you can get rid of your debts even if you cannot afford to hire a bankruptcy lawyer.

In fact, we encourage you to watch testimonials from some of our past users who were able to get rid of their debts by filing a Chapter 7 bankruptcy case. Even though you may not fully understand the court system or the Chapter 7 bankruptcy rules, we’ll help you navigate the bankruptcy system on your journey to a debt-free life.

The Chapter 7 Bankruptcy Rules for Qualifying to File Under Chapter 7

Individuals, spouses, and businesses can file for bankruptcy relief pursuant to the Chapter 7 bankruptcy rules. Individuals and couples who file under this bankruptcy chapter must meet the income qualifications according to the Chapter 7 bankruptcy rules.

To determine if you meet the income requirements under the Chapter 7 bankruptcy rules, we will help you complete the Means Test. The Means Test compares your average monthly income to the median income of other households of the same size in your state.

If your income is below the median income for your state, you should qualify to file under the Chapter 7 bankruptcy rules. However, if your income is above the median income, the Chapter 7 bankruptcy rules state that you must complete the second section of the Means Test.

The second section of the Means Test determines your disposable income. Disposable income is the income you have each month after deducting living expenses that you can use to pay your debts.

The Chapter 7 bankruptcy rules allow you to deduct only certain living expenses to calculate your disposable income. For instance, you can deduct the income taxes withheld from your paycheck, health insurance, and child support. However, other expenses, such as groceries, utilities, and transportation costs are limited by the Chapter 7 bankruptcy rules.

If your disposable income is below a certain amount, you should meet the income requirements to file for debt relief under Chapter 7.

Who is Not Eligible to File Under the Chapter 7 Bankruptcy Rules?

The Chapter 7 bankruptcy rules state that some debtors are not eligible to file under Chapter 7. Some of the reasons why a debtor may not file according to the Chapter 7 bankruptcy rules include:

  • The Means Test indicates you have sufficient disposable income to file a;

  • You failed to complete your Credit Counseling Course;

  • You filed for debt relief under Chapter 7 within the past eight years;

  • You filed for debt relief within the past six years; or,

  • You attempted to commit bankruptcy fraud under the Chapter 7 bankruptcy rules.

Upsolve makes it easy to determine if you qualify under the Chapter 7 bankruptcy rules for debt relief. Just supply your email address and click one button to begin the process for getting rid of your debts even though you may not be able to afford to hire a bankruptcy attorney.

How Do I File for Chapter 7 Bankruptcy Relief?

Again, the first step is to determine if you pass the Means Test. We help you with this step. The next step is to complete your Credit Counseling Course. Several companies offer this course online. We work with a company that offers the course for just $15. You can complete the court is under two hours online.

After you complete your Credit Counseling Course, it is time to complete your Chapter 7 bankruptcy forms. The Chapter 7 bankruptcy rules are specific about the bankruptcy forms you must complete to file a bankruptcy case.

We walk you step-by-step through each form to help you complete the information accurately. An attorney reviews the bankruptcy forms before you file the forms with the bankruptcy court.

When you file your bankruptcy forms with the court, you receive a case number. The automatic stay prohibits your creditors from attempting to collect any debts without bankruptcy court approval.

After Filing Your Chapter 7 Bankruptcy Petition

The Chapter 7 bankruptcy rules require you to attend the First Meeting of Creditors. A Chapter 7 trustee is appointed to administer your case. The trustee asks you questions about your financial situation in a five to ten-minute hearing. In most cases, creditors do not appear at these hearings.

If you have not completed your second bankruptcy course before the hearing, you should do so now. The Debtor Education Course is required by the Chapter 7 bankruptcy rules for you to receive a bankruptcy discharge.

Without a bankruptcy discharge, you still owe all your debts as if you never filed a Chapter 7 bankruptcy case. Therefore, you want to complete the Debtor Education Course and file the certification of completion with the bankruptcy court as soon after you receive your case number as possible.

The Role of a Chapter 7 Trustee

The Chapter 7 trustee reviews your bankruptcy forms to ensure they are accurate and complete. He also searches for property that he can sell to pay your unsecured creditors.

However, bankruptcy exemptions protect the equity in your property. In most Chapter 7 cases, bankruptcy exemptions protect all of the debtor’s property. Therefore, the Chapter 7 trustee declares the case to be a no-asset case.

In a no-asset Chapter 7 case, you keep all your property while getting rid of most, if not all, of your unsecured debts. Under the Chapter 7 bankruptcy rules, most of the Chapter 7 cases filed in the United States are no asset cases.

Are you ready for a fresh start? We encourage you to click here to begin Upsolve’s free bankruptcy process. You’ll be glad you did.

The Chapter 7 Bankruptcy Discharge

When you complete your Chapter 7 case, the bankruptcy court issues an order closing the case, discharging the Chapter 7 trustee, and granting your bankruptcy discharge. The bankruptcy discharge is the goal of filing a bankruptcy case.

Under the Chapter 7 bankruptcy rules, you do not owe any debts that are discharged in your bankruptcy case. Creditors who hold unsecured debts that are discharged in bankruptcy cannot take any action to collect those debts under the Chapter 7 bankruptcy rules.

However, the Chapter 7 bankruptcy rules state that some debts are not eligible for a discharge. Priority unsecured debts and some unsecured debts cannot be discharged. Examples of debts not eligible for a discharge include income taxes, student loans, alimony, and child support. You should be able to get rid of your medical bills, credit card debt, old rent, personal loans, and old utility bills in a Chapter 7 case.

If Chapter 7 sounds like the solution for you, Upsolve might be able to help. We are a non-profit that helps low-income households in the United States file for Chapter 7 debt relief. Check out the information on our website and then contact us to discuss if you qualify for debt relief under the Chapter 7 bankruptcy rules.

About the author
Attorney Jonathan Petts

Jonathan Petts has over 10 years of experience in bankruptcy and is co-founder and Board Chair of Upsolve. Attorney Petts has an LLM in Bankruptcy from St. John's University, clerked for two federal bankruptcy judges, and worked at two top New York City law firms specializing in... read more

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Upsolve is a 501(c)(3) nonprofit that started in 2016. Our mission is to help low-income families who cannot afford lawyers file bankruptcy for free, using an online web app. Spun out of Harvard Law School, our team includes lawyers, engineers, and judges. We have world-class funders that include the U.S. government, former Google CEO Eric Schmidt, and leading foundations. It's one of the greatest civil rights injustices of our time that low-income families can’t access their basic rights when they can’t afford to pay for help. Combining direct services and advocacy, we’re fighting this injustice.

To learn more, read why we started Upsolve in 2016, our reviews from past users, and our press coverage from places like the New York Times and Wall Street Journal.


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