To qualify for a Chapter 7 Bankruptcy, a debtor must meet the financial standards determined by the application of the Means Test. Otherwise, you must file under Chapter 13. The Means Test is a very complicated mathematical formula which is supposed to keep people or families above a certain income level from filing for Chapter 7 and unjustly liquidating or getting a discharge all of their unsecured debt. What it does in the real world is to protect banks and credit card companies that have enticed people to overuse their credit cards from having the resulting sometimes-overwhelming debt completely discharged in a Chapter 7 case. If you are forced by the Means test into a Chapter 13, you will almost always have to pay back some of your unsecured debt. See U.S. Trustee Program link on our Resources page for information on the Means Test.
Because the actual Means Test involves complicated mythical formulae, it is possible to state only a broad general rule of thumb of how low your income has to be to qualify for a Chapter 7 filing in Pennsylvania. Very generally, the allowable income ranges from $47,439.00 for an individual to $82,078 for a family of 4, plus an additional $8,100 of income for each additional family member.
Assuming you pass the Means Test calculation and file under Chapter 7, we will prepare for you and file electronically a Chapter 7 Bankruptcy Petition with attached Schedules. Separate Schedules list your real property, personal property, and property claimed as exempt. There are also separate Schedules for each of the three classes of creditors described on our What Are Debt and Creditor Classes? page as well as other supporting documents.
Immediately upon filing, the Automatic Stay goes into effect.
Shortly after your case is filed, the Court notifies by US Mail all creditors listed on your schedules of the appointment of a Chapter 7 Trustee and of the time, date, and place of the First Meeting of Creditors, also know as a 341 Meeting, because §341 of the Bankruptcy Code requires the meeting. It is at this point that the Trustee becomes the legal owner of Property of the Estate
The 341 Meeting is required so the Trustee and all of your creditors can examine you under oath to determine the truthfulness of the statements in your Bankruptcy Petition and Schedules. Creditors rarely attend a 341 Meeting, so usually you, the Trustee, and Bankruptcy Lawyer Robert G. Williamson will be the only people in attendance. You will be sworn or asked to affirm under oath that your responses will be true by the Trustee and your responses will be recorded.
Chapter 7 Trustees are assigned to cases by the US Trustee’s Office, a division of the US Department of Justice. Your assigned Chapter 7 Trustee represents the interests of all of your unsecured creditors by holding legal title to Property of the Estate for primarily for their benefit. For most filers, the only time you will meet your Chapter 7 Trustee is during the First Meeting of Creditors.
After the 341 Meeting, the Trustee files a written report with the Court stating whether or not there is Property of the Estate that is not exempt. (See What are Exemptions? page). If there is property that is not exempt, the report will propose how that property will be distributed, in order of classes of creditors as provided in the Bankruptcy Code. If there is no Property of the Estate (See What is Property of the Estate? page), the report will state that, and the Trustee will be asked to be discharged from administering the Property of the Estate. The Trustee’s report will also recommend to the Court which of your debts should be discharged, relieving you of the responsibility to pay them back. Most debts are dischargeable except for non-exempt Chapter 7 property.