Income Considered When Determining Eligibility for a Chapter 7 Bankruptcy

What income does the court consider when determining a debtor’s eligibility for filing a Chapter 7 Bankruptcy?

Any income that a debtor receives other than social security or social security disability income will be considered by the court in the means test. Very, simply put the means test is the method of calculating your average monthly income looking back over a six month period. That number and your family size will determine whether you “pass” the means test and are eligible for filing a Chapter 7 bankruptcy. If you receive alimony, short term or long term disability through your employer, unemployment, etc., that income will be included in the means test.

However, the Court will consider social security income and social security disability income when looking at your schedule I income and that can then affect your ability to file a Chapter 7 bankruptcy. For example-if you have a family size of three and you receive $2,500 per month in SSI and $2,000 per month in income from employment then you would have no trouble meeting the means test. But the court will require you to list both sources of income on the Schedule I of your petition which would mean you have a total of $4,500 per month gross income. If you don’t have reasonable and necessary expenses somewhere in the range of $4,350-$4,500 you could draw a Motion to Dismiss your case should you attempt to file a Chapter 7 bankruptcy.

If you have questions about whether or not your income is too great to file a Chapter 7 bankruptcy, contact Dailey Law Offices today to set up a free consultation with one of our experienced bankruptcy attorneys.


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