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Do I qualify for a Chapter 7 bankruptcy?

When in need of debt relief, it can be difficult to know where to turn. You can take advantage of numerous options, but which one is right for you? What is going to make the biggest difference in your life? For some Pennsylvania residents, the answer is Chapter 7 bankruptcy.

What is a Chapter 7 bankruptcy and how do I know if I qualify? These are great questions with seemingly simple answers.

Quick Chapter 7 overview

The law refers to a Chapter 7 bankruptcy as a liquidation bankruptcy. If you go this route, you may lose some of your assets, but at the same time you may have a lot of your debt discharged, wiped clean, gone for good. Not perfect, but it can offer you the relief you want and need.

How do I know if I qualify?

Not everyone qualifies for a Chapter 7 bankruptcy. In order to find out if you do, you need to take a means test. Now, before running for the hills, this is not a difficult test. It is just a few forms -- called bankruptcy 122 forms -- that ask questions about your income level and your state's median income level.

After filling out the forms, you will find yourself looking at a page of numbers that may not mean much to you. What the means test is looking for is how your income compares to the average income level in your state. If yours is below average, congratulations, you may be able to file for Chapter 7 bankruptcy. If yours is above average, you may have to look at other debt relief options.

Exceptions

If your income level is above Pennsylvania's current median income level, don't fret. You may still qualify for a Chapter 7 bankruptcy. It will all come down to your disposable income. Disposable income is the money you have left every month after paying all of your qualifying expenses -- such as mortgage, utilities and food bills. If your disposable income does not leave you enough to pay your creditors, you may be able to file a Chapter 7 bankruptcy after all.

Get your hands on a means test

If you are considering a Chapter 7 bankruptcy, you could attempt to get your hands on a means test. You can do this online, but it may be in your best interests to contact a bankruptcy attorney who can help you fill out the forms, interpret the results and guide you through the process.

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