What Are Your Bankruptcy Alternatives When You Don’t Qualify for Chapter 7?
Facing debt can be stressful, especially when you’ve reached the point of considering bankruptcy and then learn that Chapter 7 isn’t available to you. While this can feel discouraging, not qualifying for Chapter 7 doesn’t mean you’re out of solutions.
At The Orantes Law Firm, we work with clients across Southern California and Orange County, including Los Angeles, Irvine, Woodland Hills, Riverside, Santa Ana, Koreatown, Inglewood, North Hollywood, Oakwood, and Pico Union. Our firm helps clients explore practical alternatives when Chapter 7 isn’t the right fit. We’ll walk through what those options may look like and how they can support your goals. If you’re feeling stuck or unsure where to turn next, reach out to us to talk about your situation and your options.
Why Don't Some People Qualify for Chapter 7?
Chapter 7 bankruptcy is often called “liquidation” bankruptcy, and it’s designed to wipe out many unsecured debts. Still, not everyone qualifies.
Several factors can affect eligibility, including:
Income above the California median after applying the means test
Too much disposable income left after expenses
Valuable nonexempt assets that could be sold in a Chapter 7 case
A recent prior bankruptcy filing
Certain debts that can’t be discharged, such as recent taxes or domestic support obligations
If any of these apply to you, it doesn’t mean you’ve failed or made a mistake. It simply means Chapter 7 isn’t the best match for your current situation. Once you know why you don’t qualify, you can make clearer choices about what to do next and which alternatives may better align with your needs.
Chapter 13 as a Structured Repayment Option
When Chapter 7 isn’t available, Chapter 13 bankruptcy is often the next option people consider. Instead of wiping out debts right away, Chapter 13 allows you to reorganize what you owe into a manageable repayment plan.
Chapter 13 can be especially helpful if you have a regular income and want to keep assets like a home or car. Rather than facing liquidation, you commit to a court-approved payment plan that usually lasts three to five years.
Ways Chapter 13 can help include:
Catch up on past-due mortgage or car payments over time
Stop foreclosure or repossession while payments are made
Consolidate debts into one monthly payment
Protect nonexempt assets from being sold
Discharge remaining eligible unsecured debt at the end of the plan
This type of bankruptcy isn’t right for everyone, but it can offer structure and breathing room when income is too high for Chapter 7. After completing the repayment plan, many people feel more stable and better prepared to move forward without constant pressure from creditors.
Non-Bankruptcy Debt Relief Options to Consider
Bankruptcy isn’t the only way to deal with overwhelming debt. In some cases, non-bankruptcy solutions may help you reduce what you owe or make payments more manageable without filing a court case.
These options can vary widely depending on your income, the types of debt you have, and how cooperative your creditors are. It’s important to weigh the pros and cons before committing to any approach.
Common non-bankruptcy alternatives include:
Debt settlement negotiations with creditors
Debt management plans through approved credit counseling agencies
Hardship programs offered by lenders or credit card companies
Loan modifications or temporary forbearance
Refinancing or consolidating loans at lower interest rates
Each of these options works differently, and not all debts qualify. Some may affect your credit, while others may offer short-term relief during financial hardship. The key is choosing an option that fits your long-term goals, not just quick relief. Exploring these paths carefully can help you avoid unnecessary stress later on.
Protecting Assets and Income Without Filing Bankruptcy
One of the biggest fears people have when dealing with debt is losing what they’ve worked hard to build. If you don’t qualify for Chapter 7, you may still have ways to protect your income and assets without filing bankruptcy at all.
Proactive measures can help ease financial strain and provide time to regain stability. These approaches prioritize essential expenses and tackle problem debts head-on.
Steps that may help protect your financial stability include:
Creating a realistic budget focused on necessities
Prioritizing secured debts tied to important assets
Selling or downsizing nonessential property voluntarily
Reviewing whether debts are past the statute of limitations
Addressing wage garnishments or bank levies promptly
While these actions won’t eliminate all debt, they can help you stay afloat and avoid sudden financial shocks. Many people find that combining these strategies with a formal debt relief option gives them a stronger sense of control and direction.
Many people also discover that taking early, proactive steps allows them to better evaluate long-term solutions and make informed decisions about their financial future.
You’re Not Alone When Bankruptcy Isn’t an Option
Finding out that Chapter 7 isn’t available can be discouraging, but it doesn’t define your future. Whether through Chapter 13, non-bankruptcy debt relief, or other financial strategies, there are still meaningful ways to address debt and work toward stability.
At The Orantes Law Firm, we support clients in Los Angeles, California, and across Irvine, Woodland Hills, and communities across Southern California and Orange County, including Riverside, Santa Ana, Koreatown, Inglewood, North Hollywood, Oakwood, and Pico Union.
Our firm strives to help people understand their options and choose a path that fits their lives, even when traditional bankruptcy routes aren’t available. Reach out to our experienced bankruptcy lawyer today to talk about bankruptcy alternatives and start moving toward a more secure financial future.