You may be facing financial difficulties and wondering if you are eligible to file for a Chapter 7 bankruptcy to eliminate your debt. To figure out if you may be eligible, you can start by determining your monthly income and comparing that to the median family income in your state for the same size household. If your income does not exceed the state median income, you may be able to file for Chapter 7 bankruptcy.
To calculate your ‘current monthly income’, you will use your average monthly income over the six month period immediately preceding the month in which you file for bankruptcy. You will include all types of income with a few exceptions such as income tax refunds or payments received under the Social Security Act. The fact that you may be unemployed NOW with zero income does not matter – if you had a job or other income in any of the six months preceding your bankruptcy filing, you must use that income to calculate your current monthly income.
Looking over the last six months prior to filing bankruptcy figure out what income you took in. Be sure to include income from all wages including tips and commissions; gross income from operating a business; rents and other income from real property; interest, dividend or royalties; regular contributions by others; unemployment compensation; workers compensation insurance; state disability insurance; annuity payments; and, lump-sum windfall payments such as gambling profits. When you come up with a six month total, divide by 6 to determine your current monthly income.
Next determine your household size. Generally speaking, you can include the members of your family living in your household. However, some courts will allow debtors to claim only dependents listed on their tax returns while others may allow a debtor to claim members of the household who economically depend on or support a debtor and sometimes those that intermingle income and expenses with the debtor. If you have a unique situation and have questions regarding who you can include in your household for the purposes of qualifying for Chapter 7, consult an experienced attorney to be certain.
Finally, compare your income to your state’s annual family median income for your household size. The figures in the Meidan Family Income change periodically, so be sure you are consulting the most recent information. You can find up-to-date figures at the U.S. Census Bureau website.
If your income is equal to or less than the median income for the state, you may be eligible to file for Chapter 7. However, if your income exceeds the median, you will likely have to complete a means test in order to see if you can qualify when other factors are weighed. If you are considering bankruptcy, it is very important to consult an experienced bankruptcy attorney in your state and we welcome you to contact Attorney Charles E. Covey for help with your bankruptcy questions.