Lesson 14: Who Can File for Bankruptcy?

Understanding who can file for bankruptcy is essential for those considering this form of debt relief. Below, we will explore the eligibility criteria and specific requirements for different chapters of bankruptcy.

General Eligibility Requirements

Bankruptcy eligibility generally depends on the type of bankruptcy being filed and individual circumstances. Here are some common requirements:

  • Residency: The filer must be a resident of the United States.
  • Credit Counseling: The filer must complete a credit counseling course from an approved provider within 180 days before filing.
  • Previous Filings: Certain waiting periods apply if the filer has previously declared bankruptcy.

Eligibility by Bankruptcy Chapter

Chapter 7: Liquidation

Chapter 7 bankruptcy is often referred to as "liquidation" bankruptcy. It involves selling the debtor's non-exempt assets to pay creditors. To qualify for Chapter 7, the filer must pass the means test.

Chapter 13: Wage Earner's Plan

Chapter 13 bankruptcy, or the "Wage Earner's Plan," allows individuals with a regular income to develop a plan to repay all or part of their debts. To qualify, the debtor must have:

  • Regular income
  • Unsecured debts less than $465,275
  • Secured debts less than $1,395,875

Chapter 11: Reorganization

Chapter 11 is primarily used by businesses but is available to individuals as well. It allows for reorganization of debts and business operations under a plan approved by the court. There are no debt limits for Chapter 11, but it is typically more complex and expensive than other forms of bankruptcy.

Special Cases

Certain special cases apply for other types of bankruptcy filings:

  • Chapter 9: For municipalities
  • Chapter 12: For family farmers and fishermen
  • Chapter 15: For cross-border insolvency cases

Eligibility Overview Diagram

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    graph TD
        A["Who Can File for Bankruptcy?"]
        A --> B["Chapter 7"]
        A --> C["Chapter 13"]
        A --> D["Chapter 11"]
        A --> E["Special Cases"]
        E --> F["Chapter 9"]
        E --> G["Chapter 12"]
        E --> H["Chapter 15"]

Additional Considerations

It's important to consult with a bankruptcy attorney to understand eligibility and to navigate the complexities of filing. For further reading, you might find the following books helpful:

For more information on the specific types of bankruptcy, read our lessons on:

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