How Do I Qualify for Bankruptcy? 6 Eligibility Tests by Chapter

Bankruptcy eligibility depends on the chapter you file, your income, your debts, whether you have assets to protect, and if you’ve filed bankruptcy before. You can declare bankruptcy whether you’re an individual, partnership or corporation. And there’s no minimum amount of debt for Chapter 7. Filing under other chapters comes down to who’s responsible (you or the company), what’s being filed, and a handful of tests.

Credit Counseling

You must have received credit counseling within 180 days of filing for bankruptcy. You must also include a certificate of completion of the counseling course from an approved non-profit credit-counseling agency. This is a requirement for filing any chapter of bankruptcy. The counseling can be done by telephone, online or in person.

Separately, if your bankruptcy was dismissed within the last 180 days because you willfully failed to appear, voluntarily discontinued the case after a creditor sought stay relief, or violated a court order, you’re not eligible to declare bankruptcy now. These tests apply to individuals - as opposed to partnerships and corporations - filing for bankruptcy under any chapter. There are also limited exceptions to the credit counseling requirement in the case of an emergency.

Eligible to File Chapter 7 Bankruptcy

If you’re a business entity, then you’re eligible to file Chapter 7 Bankruptcy. Only an individual debtor may receive a discharge. A business filing under Chapter 7 does not receive a discharge and all non-exempt assets are liquidated under the court. The bankruptcy trustee can sell your business property that isn’t exempt to repay your creditors. Whether property is exempt is often state law. If your bankruptcy depends on keeping important assets like real estate, business equipment, or your car, you should talk with an attorney who knows bankruptcy law in your state before you file.

The filing fee in a Chapter 7 case is $245. Plus, the administrative fee is $75, and there’s a trustee surcharge of $15. Individual debtors are entitled to pay in installments, though the bankruptcy court must authorize it. There can be no more than four installment payments, all of which must be paid within 120 days.

If you have mostly consumer debt, you must pass the means test to be eligible to file Chapter 7 bankruptcy. But if the majority of your debt is business-related, or if it arose from your business, you can be exempt from this test. The means test looks at your current monthly income compared to your state’s median income. The Chapter 7 bankruptcy means test kicks in only if your current monthly income is higher than your state’s median income. You’ll use the median income in effect for cases filed on or after April 1, 2026. If the test presumes your case is abusive, a court can dismiss it. You can only rebut the presumed abuse by proving special circumstances.

To get a new Chapter 7 discharge, you must not have received a Chapter 7 or Chapter 11 discharge within the previous eight years. This starts from the filing date of the previous Chapter 7 or Chapter 11 petition. A bankruptcy discharge in Chapter 7 bankruptcy doesn’t wipe out all debt, and it doesn’t remove a lien from property owned by a filer. Some debts, including certain taxes and child support obligations, survive. The court may find that you failed to keep adequate books or financial records, hid or destroyed property, or failed to explain lost assets, and deny a discharge.

Chapter 11 or 13

To qualify for Chapter 13 bankruptcy, you’ll need a regular source of income and not too much debt. Filing under Chapter 13 requires you to be an individual rather than a business. However, a business operating as a sole proprietor may qualify for Chapter 13. As of April 1, 2025, you must have under $526,700 in unsecured debts. There’s also a cap on secured debt. Filing under Chapter 13 allows you to keep your home as you catch up on past-due payments.

For business entities who need to pursue bankruptcy, Chapter 11 is an option. Under Chapter 11, the debtor creates a repayment plan and assets are typically reorganized rather than liquidated. To be eligible for subchapter V, a debtor must not exceed a debt ceiling set by federal bankruptcy laws. The debt test for Subchapter V is $3,424,000 in combined debts, with at least half that debt having arisen from business activity. Single asset real estate cases are excluded from Subchapter V. If you don’t fit in Subchapter V, you’ll have to deal with Chapter 11. As of early October 2026, while Congress has passed a bill raising the debt limit for subchapter V to $7.5 million, the president has not yet signed it into law, and it would cover only cases filed after it takes effect. Overall, it costs $1,738 to file a Chapter 11 bankruptcy as a business. This is made up of the filing fee of $1,167 and the administrative fee of $571.

Before filing a bankruptcy petition, you should know what bankruptcy type best fits your situation. If you filed Chapter 7, you can choose to convert to Chapter 11 or 13 instead, if you’re eligible for the new chapter, but not if the case has already been converted to Chapter 7. For companies and sole proprietors, it’s important to figure out which debts belong to whom so that you file the right type of bankruptcy for the entity that owes the debt. Bankruptcy isn’t the only debt-relief option available. Consider negotiating with your creditors before filing.