When Are Chapter 7 Cases Subject to a Presumption of Abuse?

 Posted on August 24, 2023 in Chapter 7

Not everyone qualifies for Chapter 7 bankruptcy. Only individuals and married couples who do not earn much income are eligible for this kind of debt relief. Meeting the income limits for Chapter 7 bankruptcy is also known as “passing the Chapter 7 means test.” If someone files for Chapter 7 bankruptcy but does not pass this means test, their case will likely be dismissed due to the court’s presumption of abuse. This is why it is important to have a Texas bankruptcy lawyer assist you with your case.

How Can a Filer Abuse the Chapter 7 Process?

Unlike Chapter 13 bankruptcy – which requires filers to stick to a repayment plan for three to five years – Chapter 7 bankruptcy filers do not have to repay their creditors before their qualifying unsecured debts can be discharged. Because creditors have rights too, the courts reserve the extreme benefits of Chapter 7 bankruptcy for low-wage earners who are unlikely to be able to repay their debts anytime soon.

If someone does not pass the means test because their income level is too high – even after they have taken advantage of all the deductions available to them – and they file for Chapter 7 bankruptcy anyway, the court will presume that the filer is trying to abuse the system. The judge will then, likely, dismiss the filer’s case.

How an Attorney Can Help

One of the main reasons why it is so important to connect with a qualified bankruptcy lawyer before filing for Chapter 7 relief is that they can help you determine if you qualify to file for this kind of bankruptcy. If you do, they can help you prove that so that you are not accused of abusing the system. If you do not, they can help you to explore Chapter 13 bankruptcy as an alternative solution to your debt-related challenges.

Connect with a San Antonio Bankruptcy Lawyer Today for Free to Learn More 

If you do not earn much money and are struggling with overwhelming debt, you may benefit from filing for Chapter 7 bankruptcy. To learn more about the Chapter 7 bankruptcy process, the benefits, and drawbacks of this approach, and our firm’s approach to representation, schedule a free case evaluation at Law Offices of Chance M. McGhee by calling 210-342-3400 or submitting your contact information on our firm’s website. Once you have met with a dedicated San Antonio, TX bankruptcy lawyer, you can make an informed decision about filing for Chapter 7 bankruptcy, filing for Chapter 13 bankruptcy, or pursuing a bankruptcy alternative is the best solution for your circumstances.