The fact is many people who file for Chapter 7 bankruptcy earn above the median income.
Many of our clients come to us concerned that they make too much money to qualify for bankruptcy. This is because if your income is above the median income for your state and household size, then you must run the means test to determine whether or not you qualify for Chapter 7 bankruptcy.
Many people who file for Chapter 7 bankruptcy earn above the median income. Your income alone does not determine whether or not you qualify for Chapter 7, it determines whether or not you have to run the means test.
Bankruptcy Means Test Explained
The means test determines whether or not you qualify for bankruptcy relief under Chapter 7. It is a review of your income minus expenses. If your net income falls below the state median for your household size, then you automatically qualify for Chapter 7 bankruptcy.
If your net income is above the state median for your household size, then you must run the means test to determine whether or not you qualify for Chapter 7 bankruptcy. Being a high-income earner does not preclude you from relief under Chapter 7.
Certainly the means test makes qualifying for Chapter 7 bankruptcy more difficult; however, an experienced bankruptcy attorney can help you navigate the means test and qualify for the debt relief you deserve.
The Median Income In Georgia
- Household of One: $42,735
- Household of Two: $55,600
- Household of Three: $61,705
- Household of Four: $72,290
- Households of more than four: add $8,400 for each individual in excess of four.
If you live in Georgia and your net household income is at or above these figures, then you must run the means test analysis before filing for Chapter 7 bankruptcy.
Certain Expenses Help You Qualify for Chapter 7 Bankruptcy
The means test calculation allows for deductions based on a mix of your actual expenses and standard pre-determined expenses. Often the key to passing the means test is a diligent review of your allowable actual expenses.
Payments made on any secured debts are calculated in the means test. This means that your house payments, car payments, and any other secured debt payments are considered.
Though homeowners who have missed mortgage payments or have an underwater second mortgage will want to consider the benefits of Chapter 13 bankruptcy. We will further discuss this at our free consultation.
Other allowable actual expenses to take a close look at when running the means test include health care, child care, taxes, involuntary paycheck deductions, and charitable donations.
If You Truly Do Not Qualify for Chapter 7 Bankruptcy
Many people seeking bankruptcy relief would be best served by filing for Chapter 7 bankruptcy, as it erases most debts and does not require a repayment plan. However, people who do not qualify for Chapter 7 may still be able to qualify for Chapter 13 bankruptcy. Learn about the differences in our article The Differences Between Chapter 7 and Chapter 13 Bankruptcy.
With the help of the experienced attorneys at The Law Offices of Barbara B. Braziel, even people who earn well above the median income for our state can qualify for Chapter 7 bankruptcy. Contact us for a free consultation and analysis of your income.
We are a debt relief agency. We help people file for bankruptcy relief under the U.S. Bankruptcy Code.