What Happens If You Don’t Qualify for Chapter 7 Bankruptcy?

Many people initiate the bankruptcy process to file under Chapter 7 of the Bankruptcy Code. It’s the faster option. It erases most unsecured debts, like credit card balances and medical bills, without requiring a repayment plan. But not everyone qualifies.

If your income is too high or your financial situation doesn’t meet the criteria, the court may deny your Chapter 7 case. That doesn’t mean you’re out of options. Here’s what to expect if you don’t qualify—and what you can do next.

Why You Might Not Qualify

The most common reason people don’t qualify for Chapter 7 is income. The court uses something called the “means test” to compare your income to the median income in your state. If your income is too high, and you don’t have enough allowable expenses to offset it, you may fail the test.

Other factors can also affect your eligibility. If you filed for Chapter 7 in the past eight years, you’re not eligible again right away. If the court believes you’re abusing the system—for example, by taking on too much new debt right before filing—it can also deny your case.

So what happens next?

You May Be Able to File Under Chapter 13

If you don’t qualify for Chapter 7, you can usually file for Chapter 13 instead. Chapter 13 is a repayment plan that lasts three to five years. You pay back a portion of your debt over time, based on your income and what you can afford.

This option still protects from creditors. Once you file, collection calls stop. You can also stop foreclosure or repossession in many cases and catch up on missed mortgage or car payments through your repayment plan.

While Chapter 13 doesn’t erase debt as quickly as Chapter 7, it gives you structure and time to get back on your feet.

You’ll Need to Create a Repayment Plan

Chapter 13 requires you to submit a detailed repayment plan to the court. This plan outlines the monthly payment amount and how the funds will be allocated among your creditors.

The amount depends on your income, expenses, and the type of debts you owe. Some debts, such as back taxes or child support, must be paid in full. Others may only be partially repaid.

At the end of the repayment period, any remaining unsecured debt may be discharged, meaning you no longer have to pay it.

You Still Get Legal Protection

One of the primary benefits of filing for bankruptcy is the automatic stay. This legal protection kicks in as soon as you file and stops creditors from suing you, garnishing your wages, or repossessing your property. Even if you file under Chapter 13 instead of Chapter 7, you still get this protection.

This gives you breathing room and the chance to focus on your plan without constant pressure from debt collectors.

Your Property Is Less at Risk

Chapter 13 can also be a better option if you have property you’d risk losing under Chapter 7. For example, if you have equity in your home above the exemption limit, Chapter 13 lets you keep the house and pay the value through your plan. You also get more flexibility with car loans and other secured debts.

It’s Still Bankruptcy—and Still a Path Forward

Filing under Chapter 13 may feel disappointing at first, especially if you hoped to eliminate debt more quickly. However, it remains a powerful legal tool. You’ll have a clear plan and a chance to rebuild your credit and financial stability.

If you’re not sure which chapter is right for you, or if you’ve already found out that you don’t qualify for Chapter 7, you still have options. Contact The Law Offices of Robert M. Geller to determine the next steps and how to proceed.