3 Essential Requirements to be Eligible for Filing Bankruptcy

Bankruptcy Filing in PerthYou hear it quite a lot, from individuals to small businesses and even multinational corporations: filing for bankruptcy is one of the telltale signs of poorly managed finances. Although not everyone can be blamed for going insolvent, there are simply a lot of ways that such financial predicament can be avoided if only the correct management principles are adhered to. Nonetheless, going bankrupt does have its legal implications as well.

 

Law firm Hardies Lawyers shares that filing for insolvency in Perth does have its conditions. Not everyone is eligible to have his debts wiped out under the provisions of Chapter 7 bankruptcy.

 

Generally, in order to be eligible, you must be able to meet the following requirements.

 

Successful Completion of the Means Test

 

The court will examine your overall monthly income and compare this to the median monthly family income for the state where you are residing. Family size will be taken into consideration. Generally, if your monthly family income is lower than the state median, then you are eligible to file for a Chapter 7 bankruptcy. Additionally, the means test is mandatory if more than half of all your debts come from consumer purchases and not from tort debts, business, or tax debts.

 

Single, Married, or a Small Business Owner

 

Corporations, LLCs, and partnerships cannot file for a Chapter 7 bankruptcy. Only single individuals, married or small business owners are eligible to file for such bankruptcy.

 

No Bankruptcy Discharge or Dismissal in the Past

 

In order to be eligible for Chapter 7 bankruptcy, it is essential that you have not filed for bankruptcy in the past. If you had, then it should meet the minimum time requirements. For bankruptcy discharges, it should be more than 8 years before you can file for another bankruptcy. If the bankruptcy application resulted in dismissal, then you need to wait for not less than 180 days before you can apply for another one.

 

These are technically the three most fundamental requirements for eligibility in filing for Chapter 7 bankruptcy. Of course, once you get your bankruptcy discharged, you will have to undergo credit counselling so you won’t have to make the same mistake twice.