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Do I qualify for Chapter 7 bankruptcy?

Mississippians struggling with debt may want to consider their bankruptcy options. One option is filing for Chapter 7 bankruptcy. To do so, debtors must meet certain eligibility requirements. Applicants may qualify for Chapter 7 bankruptcy, if their income falls below the median income in their state. Debtors must participate in credit counseling within 180 days prior to filing for Chapter 7 and submit a certification of completion upon filing with the bankruptcy court.

However, if the debtor's income is higher than the state median, he or she may qualify for Chapter 7 bankruptcy under the means test. The means test evaluates the debtor's debt versus income for the previous six months to determine whether the applicant can repay his or her debts without filing for Chapter 7 bankruptcy.

Individuals filing for Chapter 7 may be ineligible in several circumstances including when a debtor does not pass the means test, the debtor's debt was discharged under Chapter 7 within the past eight years or the debtor did not comply with the credit counseling requirement. Individuals will also be ineligible if their Chapter 7 case was dismissed within the previous 180 days because it was fraudulent or they violated a court order. Debtors who attempted to defraud creditors, either by transferring property to friends or family members, intentionally destroying property, purchasing luxury items or lying about income and debt on credit applications, may also not be eligible for Chapter 7 bankruptcy.

Debtors who qualify for Chapter 7 bankruptcy will be granted an automatic stay, which will prevent collection activities during the bankruptcy process including wage garnishment, seizure of property and filing of liens. A future post will discuss the process of discharging debt for Mississippi debtors who are eligible for Chapter 7.

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