Chapter 7 Bankruptcy Requirements: What You Must Do to Qualify

Chapter 7 bankruptcy can erase most unsecured debt in four months. But the court doesn't let just anyone walk in and file. You face two hurdles: proving you qualify to file, and meeting the conditions to get your discharge.

Miss one requirement and the trustee can dismiss your case. Or worse, you complete the process but the court denies your discharge. That means you paid the fees and exposed your finances for nothing.

Here's what you must do at each stage.

Who Can File Chapter 7 Bankruptcy

Individuals, married couples filing jointly, and business entities (corporations, partnerships, LLCs) can all file Chapter 7. But two situations automatically disqualify you:

Prior Bankruptcy Dismissals

You cannot file if a court dismissed your previous bankruptcy case within the last 180 days because you violated a court order or voluntarily withdrew after a creditor requested relief from the automatic stay.

This rule exists to stop serial filers who use bankruptcy to delay foreclosure without any intention of completing the process. If you filed three times in two years just to postpone a sheriff's sale, the court views that as abuse of the system.

Time Limits Between Discharges

If you received a Chapter 7 discharge before, you must wait 8 years from the filing date of that case to file another Chapter 7. If your prior case was Chapter 13, the waiting period is 6 years, but only if you paid less than 100% of your unsecured debts in that plan.

These limits prevent people from wiping out debt every few years without consequence. State laws may impose additional restrictions.

Pre-Filing Requirements You Must Complete

Credit Counseling Within 180 Days

You must complete a credit counseling course from an approved provider no more than 180 days before you file. Check the U.S. Trustee's website for your district's approved list. Most providers offer the course online or by phone for $10 to $50. Budget about 90 minutes.

The course reviews bankruptcy alternatives and the differences between Chapter 7 and Chapter 13. After completion, the provider issues a certificate. File this certificate with your petition or the court will reject your case.

If you have a disability or active military duty in a combat zone, you may qualify for an exemption. Ask your attorney before skipping this step.

The $338 Filing Fee

The court charges $338 to file Chapter 7. This fee is non-negotiable, though you can request to pay it in installments over 120 days if you qualify. Low-income filers may apply for a fee waiver by filing Form 103B and proving their income is below 150% of the federal poverty line.

If the court grants installment payments and you miss one, your case gets dismissed automatically. Set reminders.

The Means Test: Proving You Qualify

The means test determines whether your income is low enough to file Chapter 7. If you earn too much, the U.S. Trustee may force you into Chapter 13 instead.

Step One: Calculate Your Current Monthly Income

Your "current monthly income" is the average of your gross income over the six months before you file. Include wages, bonuses, rental income, unemployment benefits, and most other sources. Exclude Social Security benefits.

If your income is below the median for your state and household size, you pass the means test automatically. Check the U.S. Trustee's median income table for current figures.

Step Two: If You Earn Above the Median

When your income exceeds the median, the court calculates your "disposable income" by subtracting allowable expenses from your income. These expenses follow IRS Collection Financial Standards, which set limits on housing, food, transportation, and other categories.

If your disposable income is too high, the trustee presumes abuse and may block your Chapter 7 filing. You'll need to either show special circumstances (massive medical bills, for example) or convert to Chapter 13.

The means test form (Form 122A-1 and 122A-2) is seven pages of calculations. Errors here give the trustee ammunition to dismiss your case. Most people hire an attorney for this part.

Documents You Must File

Beyond the petition itself, you must file:

• Schedules A through J: Lists of your assets, debts, income, and expenses
• Statement of Financial Affairs: Details about your recent financial history, including transfers, payments, lawsuits, and closed accounts
• Pay stubs: From the 60 days before filing
• Tax returns: Most recent year filed
• Credit counseling certificate: From your pre-filing course

You have 14 days after filing to submit any missing documents. Miss that deadline and the court dismisses your case automatically.

Requirements to Get Your Discharge

Filing is one thing. Getting your discharge is another. After you file, you must:

Attend the 341 Meeting of Creditors

About 30 days after filing, you meet with the bankruptcy trustee assigned to your case. This isn't in a courtroom. It's usually in a conference room at the federal building. The trustee asks about your petition, assets, and debts under oath. Creditors can attend but rarely do.

Failing to appear gets your case dismissed. If you can't make the scheduled date, file a motion to continue at least three days before the meeting.

Turn Over Non-Exempt Assets

The trustee sells any property you can't protect with exemptions and distributes the proceeds to creditors. Most Chapter 7 cases are "no-asset" cases, meaning you keep everything because state or federal exemptions cover it all.

If you own non-exempt property and refuse to surrender it, the trustee can deny your discharge.

Complete the Debtor Education Course

After your 341 meeting, you must complete a second course called "debtor education" or "financial management." Like the pre-filing credit counseling, use an approved provider. The course costs $10 to $50 and takes about two hours.

File the completion certificate before the court issues your discharge, typically within 60 days after the 341 meeting. If you forget, the court will not grant your discharge until you file it.

Cooperate with the Trustee

You must provide any documents or information the trustee requests. This might include bank statements, property appraisals, or explanations for unusual transactions. Ignoring requests or lying to the trustee is grounds for denial of discharge and potential criminal prosecution for bankruptcy fraud.

Common Reasons the Court Denies Discharge

Completing all requirements doesn't guarantee discharge if you committed any of these acts:

• Hiding assets: Transferring property to relatives or "forgetting" to list accounts
• Lying on your petition: Overstating expenses or understating income
• Destroying records: Concealing financial documents the trustee requests
• Recent luxury purchases: Charging $800+ on non-essentials within 90 days of filing
• Cash advances: Taking $1,100+ in cash advances within 70 days of filing

The court treats bankruptcy as a privilege for honest debtors, not a tool for fraud. If a creditor proves you acted in bad faith, the court can deny your entire discharge or make specific debts non-dischargeable.

Special Rules for Business Entities

Corporations and LLCs can file Chapter 7, but they don't get a discharge. The trustee liquidates the business assets, pays creditors what's available, and closes the entity. Owners are not personally liable for business debts unless they personally guaranteed them.

If you personally guaranteed business debt, you'll need to file an individual Chapter 7 to discharge your liability on those guarantees.

What Happens After Discharge

About 90 to 120 days after filing, assuming you met all requirements, the court issues your discharge order. This permanently eliminates your legal obligation to pay discharged debts. Creditors cannot call, sue, or garnish you for those debts ever again.

The discharge remains on your credit report for 10 years from the filing date. During that time, you can rebuild credit by making on-time payments on any secured debts you kept (like a car loan or mortgage) and using a secured credit card responsibly.

Not all debts are dischargeable. Student loans, recent taxes, child support, alimony, and debts from fraud survive bankruptcy. You remain legally obligated to pay these.

When to Get Help

The eligibility rules are straightforward, but applying them to your situation isn't always simple. If you're close to the median income line, own real estate, run a business, or have complicated finances, small mistakes on your petition can cost you your discharge.

Talk to a bankruptcy attorney before you file. Most offer free consultations. They'll run the means test, review your assets against available exemptions, and identify potential problems before they become disasters.

If you're ready to explore whether Chapter 7 is right for you, start by checking your eligibility with our bankruptcy screener. Answer a few questions and see where you stand. If Chapter 7 looks like a fit, we'll connect you with a licensed attorney in your area who can guide you through the process.

You don't have to figure this out alone. Take the first step today.