There are a few reasons a client may not qualify for a Chapter 7 Bankruptcy but the most common are (1) real estate and (2) income level.
1. Real Estate. You can own real estate and still be able to file a Chapter 7, but that real estate must be either (1) not valued very high, or (2) subject to a mortgage/debt. The Trustee will look at the current tax appraisal of any real estate you own when you file. That number will get compared to the current debt on any mortgage you may have. The difference in those two figures is what is called "equity". When you file, you get what is referred to as an "household exemption" which changes yearly but as of 2024 is currently around $19,000 in Alabama. If you are married, you get to double this amount to $34,000. This exemption amount represents how much equity you may have and still qualify for a Chapter 7 Bankruptcy. If you have more equity that was is allowed, you will need to look at filing a Chapter 13 if you are wanting to keep the real estate.
(2) Income level. There is a chart that lists allowable income levels that are based on how many members are currently in your household - your "household size". This chart varies based on your zip code. If you are under this amount, you may file a Chapter 7 Bankruptcy. If you are substantially over this amount, your only option may be to file a Chapter 13 Bankruptcy. There are exceptions and details that can make this equation more complex so it is best to speak with a qualified attorney regarding qualification, especially if you are near the allowable limits.