Here’s the “Easy” button: For the typical person that I see in a debt consultation, the determining factors for qualification for a Chapter 7 bankruptcy are the person’s income and expenses.
Keep in mind, it’s like looking at an elephant from the side versus looking at it from the front: each view presents a different picture even though you are looking at the same thing.
Looking At The Past
One look at the income is to compare the previous six months of income to median income for people in Texas, based on the household size.
The real focus here is this: what is the appropriate household size?
Rather than show you those income amount for each family size, it is more important to note that there are some variables for determining the appropriate household size.
The point here is that you want to know how bankruptcy may apply to your specific situation. In order to find out, you need to speak with someone that does this work for a living.
What If I Make Too Much Money?
You may still qualify for Chapter 7 even if your income exceeds median income for your appropriate household size.
You have to past the Means Test, which is a 10-page formula that uses incorporates your income and expenses, along with IRS allowances for certain expenses.
There are many variables at work in that formula. As a result, I have had clients qualify for a Chapter 7 even though they made more than $10,000 over median income!
If you are over median income, then you need your situation fully evaluated by a bankruptcy attorney to determine if you qualify.
Looking At The Present
Another look at the income is to compare your monthly income to your monthly expenses to see if there is any disposable income that you could pay towards unsecured debt, like credit cards.
Even if you are below median income for your appropriate household size, you could be disqualified from filing a Chapter 7 if you have monthly disposable income of over $100 to pay toward credit cards.
Here again, you need the experience of someone that does this for a living. I’ve had people come in for a debt consultation that said that they considered bankruptcy a year earlier, but after looking at some things on the internet, they determined that they did not qualify because they were able to pay more than a total of $100 to their credit cards.
Free Bankruptcy Consultation
Bankruptcy is a big decision, and you should gather as much information as you can prior to making your decision. However, you want to see how all of that information may apply to your specific situation.
I offer a no obligation free consultation where we can discuss your specific situation and provide you with options as you take care of your debt problem. Contact my office at 210-930-7000 to schedule a convenient appointment.
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