QUESTION
What is the maximum income threshold for filing for Chapter 7 bankruptcy and why?
Asked on Sep 14th, 2015 on Bankruptcy - Colorado
More details to this question:
I want to find out if I am eligible to file for Chapter 7 bankruptcy based on my income level. What is the limit for filing?
7 ANSWERS
I know you are thinking about the Means test in bankruptcy, but that part of bankruptcy law is so misunderstood that it is comical. There is no maximum income threshold to FILE chapter 7 bankruptcy. If your income is above a certain amount, which varies widely throughout the US and is based on the size of your household, you must complete additional paperwork if you have mostly consumer debts. If you have mostly business debts, this paperwork is unnecessary. The bottom line is about what is called the GOOD FAITH TEST which assesses whether you could pay one fourth of your debts off over a 5 year period if you made a realistic effort to do so. So someone with a high income, but equally high living expenses, such as a mortgage payment and car loans could be eligible to file Chapter 7. The devil is in the details, so if you are a high income earner, you can retain an attorney to help you to become eligible. If you can afford to pay your debts, the law says you are not eligible for Chapter 7 but may get help instead in Chapter 13.
Answered on Sep 15th, 2015 at 10:56 AM
Commercial & Bankruptcy Law Attorney serving Powell, OH
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Ronald K. Nims
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The maximum income for chapter 7 depends on where you live and the number of people in your household.
Answered on Sep 15th, 2015 at 10:21 AM
2 Awards
Unfortunately that is a moving number based upon your family size and number of working adults. And, just because your income exceeds the limit does not mean than the are not eligible for bankruptcy. It merely means you must run through the means test which is a review of your six month income and expenses. I recommend you seek detailed information from a reputable bankruptcy attorney to address your questions in detail.
Answered on Sep 15th, 2015 at 10:01 AM
Check out the DOJ averages for your county online.
Answered on Sep 14th, 2015 at 7:18 PM
Real Estate Attorney serving Florence, KY
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Linda S. Novakov & Associates, PLLC
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The bankruptcy limits are based on the median income levels in your area. There are a number of factors that go into determining if someone is eligible to file Chapter 7. Gather your income documentation and your expenses - not the outstanding bills you are looking to discharge, but your fixed expenses - gas and electric, auto insurance, phone, cable, house payment or rent, medical insurance, prescription costs, groceries, etc. Talk with a bankruptcy attorney and find out if you are eligible.
Answered on Sep 14th, 2015 at 5:22 PM
Appellate Attorney serving Grosse Pointe Farms, MI
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Musilli Brennan Associates, PLLC
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No, it is based more than just income. Engage an attorney with the details.
Answered on Sep 14th, 2015 at 4:17 PM
Derek W. Freeman
It's complicated. If your income is under the median income for your state, you automatically meet the income requirements. If your income is above the median, then you have to pass the means test. This test measures your income against your expenses, and if your disposable income is too high, you can't file a chapter 7. You should consult an attorney, who will be able to tell you whether you meet the income requirements or not.
Answered on Sep 14th, 2015 at 4:16 PM