Do you qualify?
In order to be eligible for a Chapter 7 bankruptcy, you must qualify. This usually means passing a means test. You pass if your income is below the means test guidelines for your household size and income. These income figures are based on the census and change every 6 months.
Current Means Test Guidelines
For cases filed after 11/01/2020
For Total Gross Income, – do not count social security or veterans disability
Add $9,000 for each additional member of your family if your household is over 4.
Make Too Much Money? Don’t Give Up
If your income is too high, you may still be able to file a Chapter 7 bankruptcy. Your expenses and circumstances determine this. For more info on what expenses are automatically allowed, the US Trustee publishes details. Each person and family is different. If you have high expenses that are necessary, you may be able to include them.
You may still qualify for Chapter 7 if you have expenses, such as:
- Large house payment or vehicle payments
- High medical expenses
- Tax debt
- Child support, alimony, or court-ordered property settlement
- Charitable contributions
- Extenuating circumstances
- If your income has gone down and is not likely to go back up
If you don’t qualify for Chapter 7 bankruptcy, you can look at other options such as Chapter 13 or Chapter 11 bankruptcy.
Are You Even Required to Pass the Means Test?
You may not even have to take the means test if:
- Majority of your debt is not “consumer” debt. Examples: tax debt, business debt, debt owed on rental property, etc.
- You are a disabled veteran
- You are active duty military, homeland defense, or national guard
Your next step to debt relief
Consulting a knowledgeable, experienced bankruptcy attorney is critical. Pre-bankruptcy planning is often needed to properly document your expenses. Bankruptcy is a big decision and has a major life impact. You want to obtain all of the available relief and truly obtain a fresh start.
Read more about bankruptcy and debt relief
Chapter 7 – Usually the cheapest and fastest type of bankruptcy, Chapter 7 can wipe out credit cards, medical bills, and loans.
Chapter 13 – If you don’t pass the means test, you can still file a Chapter 13 bankruptcy. Based on your income and expenses, you will pay back part of the debt over 5 years.