Commercial Collections Blog

Chapter 7 Bankruptcy

Chapter 7 Bankruptcy

When a commercial-debtor files for bankruptcy, first it must determined if the filing will place the debtor within the “current monthly income guidelines” — as determined by the state of the filing.   A debtor planning to file Chapter 7 must demonstrate the debtor doesn’t have sufficient earnings for a Chapter 13 bankruptcy.

The process of determining a debtor’s income in is known as “The Means Test”. This test uses the debtor’s income during the six months leading up to the bankruptcy filing (the debtor’s “current monthly income”).

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