Debtor(s) must not have filed a Chapter 7 bankruptcy in the previous 8 years. A debtor is eligible for a Chapter 7 bankruptcy given their income level is below the Arizona average for their household size and insufficient to repay their debts. The household consists of each spouse and all dependents under the age of 18 that are claimed as dependents on the debtor’s tax return. Household income includes gross W-2 and 1099 wages, net rental income, regular payments from friends and family members, early draws on the retirement accounts, child support/alimony payments and all other sources of income that contribute to the household.
Beyond these two requirements, a good candidate for a chapter 7 bankruptcy should not have transferred any equitable property in the last year. Trustees may ask that these transactions be reversed. Debtor(s) should not have paid back friends or family members in the last year. Trustees may treat this as a “preferential” treatment of creditors and ask that these funds be paid to the bankruptcy estate. There is a “presumption of abuse” for significant purchases in the 3 months prior to filing. Large purchases on the credit cards (typically over $600) in the 90 days prior to filing may be disputed by the creditor. Given the presumption, the debtor must pay back the debt.