Chapter 7

Assuming we have decided that a Chapter 7 filing appears to be the best alternative, consider whether you are eligible to file. To be eligible to file bankruptcy, you must

  • reside or have a domicile, place of business, or property in the United States, 11 U.S.C. § 109(a);
  • not have been a debtor in a bankruptcy case at any time during the 180-day period prior to the filing of the current bankruptcy case if
  • the prior case was dismissed because of willful failure of the debtor to abide by orders of the court or to appear before the court to prosecute the case, or
  • the prior case was dismissed at the request of the debtor following the filing of a motion for relief from the automatic stay, 11 U.S.C. § 109(g); and
  • have received, during the 180-day period prior to the filing of the current bankruptcy petition, a briefing from an approved nonprofit budget and credit counseling agency, unless an exemption applies, 11 U.S.C. § 109(h).

One benefit of a Chapter 7 filing is the ability of a debtor to receive a discharge from certain debts. See 11 U.S.C. §§ 523, 727. A Chapter 7 filing is probably the best alternative if you:

  • have an income that is less than the “median family income” as defined in 11 U.S.C. § 101(39A);
  • are facing overwhelming obligations and want to get a “fresh start” without debt;
  • have little or no nonexempt assets;
  • do not own a home, or own a home and is either current with mortgage payments or willing to lose it; and
  • are not likely to face objections to discharge or dischargeability.