Is there such a thing as making too much to qualify for chapter 7 bankruptcy?

Question

Both my husband and I make a total annual salary of $130,000.  Would we still be able to qualify for Chapter 7 Bankruptcy?

Frances Ruiz · Answer

It depends on your expenses and how many dependents you have.

Theodore N. Stapleton · Answer

Probably not it depends upon what monthly payments you pay to secured creditors.

Eric Lewis · Answer

If the majority of the debt involved is "consumer debt," then yes, there are limitations on how much you can make and still be able to file Chapter 7 bankruptcy.

Philip Boardman · Answer

Generally speaking, you probably would not qualify for a Chapter 7 bankruptcy since you make more than the median income.  For example, in a household size of 4, the median income in Virginia is approximately $85,000. However, you may still qualify if you have special circumstances.

Jacob Braunstein · Answer

Eligibility for a Ch7 is based in large part on income. If a family's income is above the median income for a family of their size, they will likely be forced to file a Ch13 as opposed to a Ch7 bankruptcy.

Gregory Wald · Answer

If your debts are primarily non-consumer, then you can file Chapter 7.  If you debts are primarily consumer, then we have to take into account your income.  Your current income for this purpose is based on your average income for the past six calendar months.  If your current income is below the median income, you are most likely eligible for Chapter 7.  You would have to be in a household of at least 10 people in order to be below median.  If you are above the median income, you may still be eligible for Chapter 7 bankruptcy if you pass the "Means Test".  The Means Test is a somewhat complex formula that is supposed to determine whether it can be presumed that you have sufficient disposable income to make a payment of about $100 or more per month under Chapter 13.  The idea behind the law is that higher income earners should at least pay some of their debt through Chapter 13 bankruptcy.  This analysis can be quite involved.  I recommend that you call an experience bankruptcy attorney for an office consultation.

Max Rosenberg · Answer

Probably not, unless you have significant exemptions and dependents that you live with. It is not impossible. If you are both financing cars, and you have two or three children/ dependents living with you, it would be doable. You need to hire an experienced bankruptcy attorney to work through all the numbers with you. Good luck.

Nanina Takla · Answer

That depends on a variety of factors including your household size, the  amount you are obligated to pay on secured debts such as mortgages and  car loans, your monthly medical costs, your child care costs, etc. You  would need to speak with a bankruptcy attorney about your situation to  figure out whether you would be eligible to file for a chapter 7.

Jeremiah Raxter · Answer

It would depend on the number of dependents. The "means" tests is calculation that is done by your bankruptcy attorney that determines if you "qualify" for bankruptcy.

William Rubendall · Answer

There is a calculation called the "means test" that determines eligibility to  qualify for chapter 7. There are various deductions allowed and the specific  ones can be elicited by consulting with a bankruptcy attorney.

Glen Edward Ashman · Answer

You may or may not, depending on the means test.  That requires a lot more information than what you posted, including information on your secured and unsecured debts, size of your mortgage payment, certain other expenses, family size, etc.

Seth Schraier · Answer

Not necessarily.  First, you have to calculate your current monthly income.  Then you must apply your CMI to the appropriate median income figure.  The bankruptcy law defines your CMI as your average monthly income received during the six-month period that ends on the last day of the month preceding your filing date whether or not the income is taxable. When including wages or other sources of income, you must include the gross amount, not the net income you actually receive after deductions from taxes and other with holdings are made.  To compare your current monthly income to the family median income for your state, you'll need to multiply your current monthly income by 12.  If your CMI is less than or equal to your states family median income you aren't subject to the means test in a Chapter 7 bankruptcy filing.  If your current monthly income as calculated above exceeds your states family median income then you must look at other factors. If the majority of your debt is consumer debt (meaning it doesn't come from operating a business, tax debts, or debts for personal injury or property damage you caused to someone else), you'll have to take whats called the means test. Under this test, you can't file for Chapter 7 bankruptcy if, after certain expenses are deducted, your remaining income would exceed $10,950 when projected over a five-year period ($182.50 per month) or  would be equal to at least $6,575 over five years ($110 per month) and would pay at least 25% of your unsecured, non-priority debts over that same period. Unsecured, non-priority debts include credit card and department store charge card bills, medical bills, utility bills, and student loans.  If your remaining income would be less than $6,575 when projected over the next five years, you will pass the means test and can file for Chapter 7 if you meet the other eligibility requirements.

Yvonne Novak · Answer

Yes, you can make too much to file a Chapter 7 bankruptcy.  There is a "means test" that has a basic income threshold to determine if you have to file a Chapter 13 bankruptcy instead of a Chapter 7.  Even if you are above the income threshold, you may still be able to file a Chapter 7 depending on what you have for allowable expenses.    Each case is different so consultation with a local bankruptcy attorney is recommended.

judith runyon · Answer

It depends upon also your monthly living expenses

Spencer Hale · Answer

With that income it is very unlikely that you would qualify for a chapter 7, but it depends on how many kids you have and what other expenses you have.

Charles Schneider · Answer

It depends on the size of your household. You may but most likely you will not.

Curtis Chronister · Answer

There are situations where this income level could still be worked into a Chapter 7.   First, to qualify for filing under Chapter 7, the following are considered:   Does your income fall below the Georgia Median.  If yes, then you are not required to complete the means test and you may be eligible to file under Chapter 7 of the bankruptcy code.  Your household size is a large factor.  If your income is above the Georgia Median, then you must complete the Means Test.  This is a spreadsheet that takes your income and compares it to local and national standards for specific expenses to determine whether or not you should have disposable income remaining to pay creditors. If your disposable income is within a specific amount, then you may again qualify to file a Chapter 7 bankruptcy.  However, if your disposable income is above that threshold, then it is unlikely you will qualify to file a Chapter 7.   Even if your income is below the Georgia Median and your disposable income as computed by the Means Test is below the threshold, you must still complete schedules I and J.  These schedules look at your actual income and expenses.  Again, based on your situation, the court will look to see if you have any disposable income to pay creditors.  You do not have to have a zero or negative amount in monthly disposable income to qualify under Chapter 7, but the less you have remaining available would be a good indicator that you may qualify for a Chapter 7. Another consideration is the amount of assets you have available. This alone does not mean you would not qualify to file a Chapter 7 bankruptcy, but if your allowable expenses are less than your available assets, then you may not want to file a Chapter 7 - since there is a good chance a Trustee would look to liquidate any assets available in excess of your exemptions.  An issue also arises if you are behind on your home and other secured debts.  While you may qualify for a Chapter 7 and being behind on your secured debts would not keep your case from being discharged, there is not provision in a Chapter 7 to cure those arrearages.  Another caveat, if the majority of your debt is considered business debt, then the means test would not come into play.

Tony Carballo · Answer

Maybe but it also depends on many things like the number of dependents, mortgage payments, car payments, charitable contributions, tax withholdings, medical insurance cost, etc.

Larry Webb · Answer

Oh yes. Since 2005 you have to pass the means test which compares your income less allowed expenses to the IRS standards for your area.

Paul Stuber · Answer

There is a means test. Most likely, with the salary you gave,  you would not qualify for a chapter 7 bankruptcy.

Nicholas Belisle Lazzarini · Answer

Yes.  To qualify for Chapter 7, you have to pass an income-based means test which is calculated on a 6-month rolling average prior to filing and compared to median income in your geographic area.  As such, the income limits may vary by a substantial amount depending on where you live.  Also, there are certain payments and expenses that can be deducted from your income to reduce your average monthly income for means-test purposes.  A bankruptcy attorney can assist you to determine if you can qualify for Chapter 7, or if you will have to file a Chapter 13.

Margaret Evans · Answer

Absolutely, Yes. We run the means test and if, after taking all of the allowable deductions, a presumption of abuse arises, then yes, you make too much to file a Chapter 7 in most cases (the exceptions would be extremely rare in that situation). If both you and your husband make a total annual salary of $130,000, I don;t think you will qualify for a Chapter 7, unless you had LOTS of children and other justifiable expenses.  However, you could still file a Chapter 13.

William Canty · Answer

Yes. However, if it's more than 50% business related, you could file Chapter 7. If it's less than 50%, it depends on the number of people in your household, the amount of secured debt you have and other specified expenses that can be "backed out."  It's a complicated calculation.

Loren Zahn · Answer

There is an income limit, but you may still be able to qualify based upon your monthly expenses.

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Is there such a thing as making too much to qualify for chapter 7 bankruptcy?

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