To qualify for Chapter 7, you must pass the means test. The means test compares your average current monthly income (CMI) with the median income of a family of your size in your area. you would be compared with families who also live in your area. If your income is less than the median, you pass the means test. If not, a more complex calculation to determine your monthly “disposable income” must be performed.

After your bankruptcy petition is filed, a trustee is appointed to oversee your case. A meeting is scheduled with your Chapter 7 Trustee, referred to as a “Section 341 meeting.” At this meeting, the trustee and creditors are entitled to ask you questions and raise objections to your plan. Following the meeting, the trustee may liquidate your non-exempt assets. However, in about 95% of cases there are no assets to sell because the assets are: Leased, Exempt and/or Valueless.

If assets are liquidated by your Trustee, the proceeds are distributed to your creditors. This does not affect the timing of getting your Discharge, which is usually granted 90 days after the bankruptcy filing. A discharge is the legal way of saying debts are wiped clean.