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Who can qualify for Chapter 7 bankruptcy?

As of 2005, debtors must pass the "means" test in order to qualify for Chapter 7 bankruptcy. The "means" test is used to determine whether your income is low enough relative to your necessary expenses to qualify for Chapter 7 bankruptcy. The test is a specific formula designed to prevent high-income earners from taking advantage of the system. The idea behind it is to ensure that anyone who files for Chapter 7 bankruptcy genuinely needs assistance to pay off his or her debts.

The formula used takes the current income of the potential filer and then deducts monthly expenses to determine disposable income. The higher your disposable income, the less likely you will qualify for Chapter 7 bankruptcy. If you make too much money, you cannot use Chapter 7 bankruptcy to completely wipe out your debt, but you do still have the option of filing under Chapter 13 bankruptcy.