You may be wondering whether your income exceeds the limits allowed by bankruptcy income allowances. You might be surprised at how much money you can be making and still file for bankruptcy. It will depend on several factors including your assets, income, debts and any other consideration the court determines to be fair.
Means Test - Which Bankruptcy Is Right for You?
The means test is meant to help you (and the court) determine which bankruptcy is right for you. If you meet the means test, you can file for Chapter 7; if not, you may be eligible for Chapter 13, which usually reduces but does not eliminate your total debt.
The means test measures your income against the median income of similarly situated individuals in your state. This can range for a one person household, depending on the state you live in, from $30,000 to $50,000. If you have children, the number increases. Your family size determines your household. Your income the six months prior to filing bankruptcy is usually used to determine this number. If your income fluctuates, the court can look at this if they decide it would be more fair.
Some expenses are allowed to be deducted from your income prior to determining the number you have accessible to pay your creditors in the case of Chapter 13 bankruptcy. Discuss your obligations and assets with an attorney to find out whether you will meet the means test, and if not, how much income you will be required to use to pay debts in the case of Chapter 13 bankruptcy.
What If Your Salary Is Higher?
If you make a good salary, but are still having financial troubles due to excessive debt, you may still be eligible to file either Chapter 11 or Chapter 13 bankruptcy. This will not totally eliminate your debt, but will give you some relief if it is granted. Even doctors and lawyers and other individuals who make considerable incomes file for these types of bankruptcies. So, consult an experienced attorney before losing any assets or struggling further.
Getting Legal Help
An attorney familiar with bankruptcy law is the best person to get help from if you are facing financial struggles that might lead to bankruptcy. Bankruptcy is a complicated legal process. An attorney will demystify the process for you, advising you of your options and rights, helping you with the legal filings and notifications and appearing with you in court.
