Can I file for Chapter 7 bankruptcy?

Discharging debt through bankruptcy is extremely appealing for those who are currently unable to make ends meet. While this is possible through both Chapter 7 and Chapter 13 bankruptcies, most people find the first option more appealing as the latter first requires careful adherence to a repayment plan for a period of three to five years. However, not everyone qualifies for Chapter 7 bankruptcy. 

Individuals must pass the means test to qualify for Chapter 7. To pass the means test, a person’s income for the six months before filing must fall below Connecticut’s median income. Income includes more than what a person might earn in a paycheck, too. Tips, investment dividends, child or spousal support, unemployment, pensions, workers’ comp, disability insurance, gross income from businesses, annuity payments and more all qualify as income. Those who fall below the median income can proceed with a Chapter 7 filing. 

But what about those who do not pass? If an individual’s income surpasses Connecticut’s median, then the court will look at leftover disposable income after certain monthly expenses. If a person can still pay back some of their debt after making their allowed monthly expenses — including food and rent — then their initial filing will probably be dismissed. 

Individuals who are filing for bankruptcy usually do not have the luxury of extra time on their side. If their initial Chapter 7 bankruptcy filing is dismissed, then they will have to wait before pursuing Chapter 13. To avoid costly delays during which debts can grow even bigger, Connecticut consumers may want to utilize expert guidance when making their initial filing.