What Can You Do If You’re Unable To Discharge Debts in Chapter 7?
When you’re considering filing for personal bankruptcy protection, you have two primary options: the permanent discharge of certain debts through a Chapter 7 petition and the reorganization of debt under Chapter 13. To qualify for Chapter 7, you must submit to a “means test,” in which the bankruptcy court determines whether you have the resources to repay your creditors over a three-to-five-year period. What are your options if you fail the means test?
Can You Appeal a Bankruptcy Court Decision Denying You the Right to File Under Chapter 7?
There’s no formal way to appeal a decision by the bankruptcy court that you don’t meet the standards to file under Chapter 7. Accordingly, with very limited exceptions, when you fail the means test, your only recourse in personal bankruptcy is through Chapter 13.
When Can You File Under Chapter 7 After Failing the Means Test?
There are a few situations in which a person who has failed the means test may nonetheless qualify to permanently discharge debts in Chapter 7. These exceptions involve the debtor demonstrating certain “special circumstances”:
- The debtor has a serious medical condition that affects their ability to manage their debt.
- The debtor has been called to active duty in the armed forces of the United States.
- The debtor has experienced a loss of overtime pay since the time of filing their bankruptcy petition.
In addition, certain individuals may be exempt from taking the means test, and certain types of debts don’t require a means test:
- Disabled veterans and National Guard/military reserve personnel may be exempt for taking the means test.
- If your debts are primarily business-related, you won’t be required to submit to the means test.
Contact an Experienced Rockwall, TX Chapter 13 Bankruptcy Attorney
Let us help you take the right steps and make good decisions when filing for personal bankruptcy protection. At the Law Offices of Carrie Weir, all potential clients are entitled to a free initial consultation. To arrange an appointment, contact my office online or call 972-772-3083. I handle Texas personal bankruptcy filings in Kaufman County, Rockwall County, Collin County, Dallas County, Hunt County, and the surrounding counties.
