Although you can be above median income and still qualify for a Chapter 7 bankruptcy, the easiest way to qualify is to be below median income for your household size.
The real focus here is this: what is the appropriate household size?
Comparison of Your Household Income To Median Income
One factor in determining if you qualify for Chapter 7 is to compare your previous six months of income to median income for people in Texas, based on the 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 greater the household size, the greater the amount of income that you can earn and still qualify for a Chapter 7. In some cases, I’m looking for ways of increasing the household size without increasing the household income.
Example 1: Single lady files her tax return showing no dependents, and her income is well over the median income level for a household size of one. However, she has her elderly parents living there, and their sole source of income is from Social Security. Even if her parents don’t give her any money, her appropriate household size is 3 rather than 1.
Example 2: Divorced man files his tax return showing no dependents, because his divorce decree provided that the ex-wife gets to claim the kids. The divorce decree also provides that he has to pay some of the kids’ college expenses. He has 2 kids, 18 and 19, that live away at college, and do not work, and he provides then money for food, shelter and gas. He can appropriately claim a household size of 3, due to the support for the kids that he is paying.
Example 3: Single lady files her tax return showing no dependents, and her income is well over the median income level for a household size of one. Some people looking on the internet may think she would not qualify for a Chapter 7. However, she has some other people in the house: her adult son (working), adult daughter (working), son-in-law (unemployed) and 2-year-old grandchild are in the house. She can claim appropriately claim the unemployed son-in-law and grandchild as part of her household size because she is paying for their food and housing, and it is appropriate to exclude the income-earning son and daughter, as they operate as a different economic unit.
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.
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