If you are struggling with credit cards, medical bills, personal loans or other debt, Chapter 7 bankruptcy may provide a financial fresh start.
But how do you know whether you qualify?
There is no single income number that answers the question for everyone.
What Is the Chapter 7 Means Test?
The bankruptcy means test is used in many consumer Chapter 7 cases to determine whether a presumption of abuse arises.
The analysis begins by looking at income, household circumstances and applicable figures.
If income falls below an applicable median-income threshold, the analysis may be simpler.
If income is higher, that does not automatically mean you cannot file Chapter 7.
Additional calculations may be required.
What Income Counts?
The bankruptcy calculation does not necessarily work exactly like your tax return.
Various sources of income and the statutory calculation period can matter.
This is one reason online “Do I qualify?” calculators can provide incomplete answers.
What If I Make Too Much Money?
Do not assume that you are disqualified from Chapter 7 simply because you earn a good salary.
Depending on your circumstances, you may still qualify after the complete means-test calculation or another aspect of bankruptcy law may apply.
And even if Chapter 7 is not appropriate, Chapter 13 may provide substantial debt relief.
Is Income the Only Qualification?
No.
A Chapter 7 attorney should also examine:
- Assets
- Exemptions
- Recent property transfers
- Payments to relatives
- Prior bankruptcy cases
- Recent credit-card use
- Business interests
- Tax debts
- Secured debts
- Your overall financial circumstances
Being eligible to file Chapter 7 does not necessarily mean Chapter 7 is the best choice.
Will I Lose Property If I Qualify?
Not necessarily.
Oklahoma exemptions can protect qualifying property.
The correct analysis is therefore not simply, “Can I file Chapter 7?”
It is:
Can I file Chapter 7, what debts will it eliminate, and what happens to my property if I do?
Frequently Asked Questions
Is there an Oklahoma Chapter 7 income limit?
Bankruptcy uses median-income figures and a statutory means-test calculation rather than one permanent income ceiling applicable to every debtor.
Can I file Chapter 7 if my income is above median?
Potentially. Above-median income does not automatically prohibit Chapter 7.
Does my spouse’s income count?
It can, depending on the circumstances, even when only one spouse files. The precise treatment should be evaluated in the means-test analysis.
What if I don’t qualify?
Chapter 13 or another debt-relief strategy may be available.
Find Out Whether You Qualify for Chapter 7
Don’t rule yourself out based on something you read online or what happened in someone else’s bankruptcy.
Contact Brown Law Firm for a free bankruptcy consultation. We can review your income, household circumstances, debts and property and determine whether Chapter 7 or Chapter 13 is likely to provide the better solution.
