How is a Chapter 13 Plan Payment Calculated?
September 7, 2025
Chapter 7 Bankruptcy: Frequently Asked Questions
The following responses are intended as general information and should not be taken as legal advice.
What is a chapter 7 bankruptcy?
A chapter 7 bankruptcy is the most common form of bankruptcy filed by consumer debtors. This chapter does not require filers (debtors) to repay their debts unlike a chapter 13 which is a repayment plan. The debtor will receive a discharge (forgiveness) of eligible debts in about three months from the date of filing. Chapter 7 is most the cost-effective way to obtain a fresh start, however, not everyone will qualify. Chapter 7 is a liquidation of non-exempt property. This law office strives to ensure our clients forfeit very little to no assets in their bankruptcy. In most cases, our clients end up with no- asset cases. In other cases, the client turns over a limited amount of assets such as a portion of their next years tax return. We will explain which assets if any you may lose.
What does a chapter 7 discharge do?
A chapter 7 discharge is a federal court order that legally prevents creditors from attempting to collect against the debtor’s discharged debts. All of the debts listed in the bankruptcy are automatically included in the discharge order so long as they are eligible for discharge. An attorney will explain which debts, if any, are not dischargeable such as student loans and certain tax debts. Most debts are eligible to be discharged including but not limited to medical debts, credit cards, personal loans, payday loans, rental related, auto loan deficiency balances and many more.
How do I obtain a chapter 7 discharge?
First you must be eligible to file a chapter 7 bankruptcy. Certain income requirements apply depending on your household size and location. You may not qualify if you filed bankruptcy in the past. Once qualification has been established, the debtor must file a bankruptcy petition, schedules and other related documents with the bankruptcy court. The debtor must take a credit counseling course and attend a meeting of creditors as well as comply with any instructions from the chapter 7 trustee assigned to the case.
What is the bankruptcy means test?
In short, the means test is a form filed in every case which determines whether the debtor’s income exceeds a certain threshold for their household size and location. If the debtor’s income is higher than the median income, they may still qualify depending on the amount of their disposable income as determined by the form. The expenses used on the form to determine disposable income are not the debtor’s actual expenses but rather are taken from the IRS local standards. The only expenses which are based on the debtor’s actual expenses are for secured debt payments, child support, health care, and most payroll deductions.
It is advisable that you hire a Denver Colorado bankruptcy attorney for this process. The means test is not a straightforward form to complete. Most pro se debtors learn this only after their case is filed and dismissed. The form has many limitations which are not immediately discernible from the form itself. Since the form was first implemented, the expenses which may be deducted on the form have been limited by judicial decisions. Only by staying up to date with current case law is an attorney able to properly complete the form. Do not rely on online means test forms. These online forms allow a debtor to deduct all of their actual expenses. You cannot substitute the advice of counsel to complete the chapter 7 means test form.
Your attorney will immediately advise you whether you are eligible under the form 22(a) Means Test and provide counsel on how to proceed. It is not advisable for a debtor to proceed with a chapter 7 bankruptcy once their attorney has determined a presumption of abuse will arise in the case. There are certain exceptions to this for debtors who income from the last 6 months does not reflect their current situation. The form is based on the last 6 months of income and therefore the U.S. Trustee’s office may allow the case to proceed so long as the debtor provides substantial documentation to support their current situation.
If a presumption of abuse arises, your attorney should advise you of this before the case is filed. It is generally not advisable to proceed with a chapter 7 unless certain exceptions which your bankruptcy attorney can explain are applicable to your case. If you decide to proceed with such a case, the U.S. Trustee’s office will file a presumption of abuse. You will not receive a discharge unless you successfully convince the trustee that you merit an exception with is very rarely granted.
Are there other factors that would prevent a discharge?
Aside from the income requirements under the means test, you may not be eligible to maintain a chapter 7 case if:
- You filed a chapter 7 in the last 8 years and received a discharge or you filed a chapter 13 in the last 6 years (with certain exceptions).
- You defraud your creditors in your chapter 7 case by concealing or transferring valuable non-exempt assets.
- You made false claims regarding your financial condition in order to obtain credit and the creditor objects.
- You falsify or conceal financial records and/or business agreements.
- You mislead the chapter trustee appointed to your bankruptcy case regarding your financial situation and/or withhold information form the trustee.
- You fail to explain a significant loss of property. For example if you liquidate significant non-exempt assets before you file bankruptcy and fail to explain what you did with the proceeds.
- You fail to attend the meeting of creditor or fail to answer questions during the meeting.
- You fail to take a course in personal financial management within 45 days of the meeting of creditors.
- You were convicted of bankruptcy fraud in the past.
- This is not a comprehensive list. Other exemptions to eligibility may apply. Seek legal counsel with any questions.
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