What Disqualifies You from Chapter 7 Bankruptcy?

Money stress hits hard, and when bills stack up, Chapter 7 bankruptcy can feel like a lifeline. It wipes out many unsecured debts and stops collection, giving you room to breathe.

At Yusufov Law Firm, PLLC, we help individuals and families in Mesa, Phoenix, and Tucson figure out if Chapter 7 is a good fit, and what to do if it is not. This article explains the most common reasons why a Chapter 7 case gets denied or dismissed, plus practical next steps.

Common Disqualifications for Chapter 7 Bankruptcy

Before anyone files, it helps to know what could block a discharge. A little planning on the front end saves time, money, and a lot of frustration later.

Failing the Means Test

The means test checks whether your income leaves enough room to pay creditors. It looks at your average monthly income from the six full months before filing and compares it to the Arizona median for your household size. If your income is above the median, you must run a second part of the test that subtracts allowed expenses and secured debt payments to see if Chapter 7 would be abusive.

Here is a simple way to think through the means test process:

• Step 1: Compare your six-month average income to the Arizona median for your household size.
• Step 2: If above the median, run the expense formula, including IRS standard expenses and secured payments.
• Step 3: If your disposable income is too high, the court can push you toward repayment under Chapter 13.

If the numbers do not work for Chapter 7, Chapter 13 can still give strong relief with a structured plan.

Prior Bankruptcy Filing Restrictions

Waiting periods apply if you received a discharge in a prior case. These rules focus on your last filing date, not the discharge date.

In most situations, the rules are:

Previous Case	New Case Seeking Discharge	Minimum Wait Time
Chapter 7 discharge	Chapter 7	8 years
Chapter 13 discharge	Chapter 7	6 years
Chapter 7 discharge	Chapter 13	4 years
Chapter 13 discharge	Chapter 13	2 years

 

If you are not eligible for a new discharge yet, a Chapter 13 filing can still help with collection pressure and repayment timing.

Failure to Complete Credit Counseling

Credit counseling from an approved agency must be completed within 180 days before filing. The certificate goes with your bankruptcy papers. Skipping this step stops a case cold, even if everything else looks fine.

Fraudulent Actions

Bankruptcy courts in Arizona watch for behavior that abuses the system. Intentional dishonesty can block a discharge and trigger referrals for criminal review.

• Hiding property, moving assets to friends or family, or selling for far less than fair value.
• Destroying records or refusing to produce documents when asked by the trustee.
• False information on schedules, using wrong Social Security numbers, or fake statements to creditors.

When in doubt, disclose it. Full and accurate disclosure protects your case and your peace of mind.

Recent Significant Purchases

Large charges close to filing look suspicious. The law presumes certain recent luxury spending or cash advances to be fraudulent, which can block the discharge of those debts. Luxury purchases over $725 within 90 days of filing, or cash advances over $1,000 within 70 days of filing, can draw objections.

If you had an unusual emergency expense before filing, bring receipts and context to your consultation. Careful timing helps avoid headaches.

Non-Dischargeable Debts

Some debts do not go away in Chapter 7. This includes domestic support obligations like child support and spousal maintenance, recent income taxes and certain other taxes, debts from willful and malicious injury, DUI-related injury or death claims, and criminal restitution.

If your main problem is one of these categories, a Chapter 13 plan or other route can still help manage the fallout.

Dismissed Prior Bankruptcy Case

A prior case dismissed in the last 180 days can block a new filing. This applies when someone failed to appear, ignored court orders, or asked for dismissal after a creditor moved for relief from the stay to get at collateral.

If this happens, timing and planning matter. Our team often sets a clear checklist before refiling to avoid the same result.

Failure to Cooperate

Cooperation with the trustee and the court is not optional. Missing steps can prompt dismissal or loss of discharge.

• Not providing tax returns, pay stubs, bank statements, or other requested documents.
• Skipping the 341 meeting of creditors.
• Ignoring court orders or deadlines set by the court.

Staying organized and responsive keeps your case on track and reduces stress for you.

Alternatives if Disqualified from Chapter 7

If Chapter 7 is not available, you still have real options. A quick review of your budget and goals can point the way.

Debt consolidation can roll multiple balances into one loan with a single payment. If the rate is lower than your card’s, interest costs can drop, and life gets simpler.

Debt settlement involves negotiating lump-sum or short-term payoffs for less than the full balance. There are credit score tradeoffs and possible tax reporting on forgiven amounts, yet it can resolve accounts faster than years of minimum payments.

Asset liquidation can help if you own items that are not protected and not essential. Selling a second vehicle, collectibles, or equipment can create quick relief without court involvement.

Chapter 13 bankruptcy remains a strong alternative for those who do not pass the means test or need to catch up on secured debts. It uses a court-approved plan, usually three to five years, that can stop collection action and protect your assets. An additional benefit is that any payments you make to your unsecured creditors are determined by your income, and you normally do not pay interest.

Considering Chapter 7 Bankruptcy? Contact Us Today

We care about practical results and clear guidance, not guesswork. Yusufov Law Firm PLLC works with clients across Mesa, Phoenix, and Tucson to find a strategy that best fits each individual situation. If you have questions, we are ready to talk through your numbers and explain your options in plain language.

Feel free to call us at 520-745-4429 (Tucson) or 480-788-0098 (Phoenix), or reach us through our Contact Us page. We welcome your questions about timelines, the means test in Arizona, and what to expect at each step. We are committed to helping you move forward with the best outcome the law allows, and to do it with as little stress as possible.