Do I Make Too Much Money For Chapter 7?


Do I Make Too Much Money For Chapter 7?

In order to benefit from the relief offered under Chapter 7, you must show the court that you qualify. Qualifying for Chapter 7 essentially boils down to two key categories: Income and Assets. This article examines your income, but also touches on the assets requirement for qualifying for Chapter 7. If you have questions or would like to speak with an attorney, simply call 704.749.7747 or click for a FREE CASE EVALUATION.

Median Household Income

First, whether you are filing alone, or filing with a spouse (Filing Bankruptcy While Married), we must start with your household income. This means we disclose to the court the income your household has generated over the past six months. While you will also provide tax returns from the past 2 years, the court focuses on the past 6 months of income.

If your household income is lower than the State Median Family Income, you automatically qualify for Chapter 7 from an income perspective. You can access the median family income guide to see the figures based on household size. Effective November 1st, 2018, the following figures represent the median income for Chapter 7 in North Carolina:

Household Size                 Income

 1                                  $46,470.00

 2                                 $60,407.00

 3                                 $67,211.00

 4                                 $82,994.00

 5                                 $91,394.00

 6                                 $99,794.00


If your combined average household income for the 6 months preceding filing is less than the figures above, you will qualify. However, even if your income exceeds the figures in the table above, you can still qualify for Chapter 7 by passing The Means Test. In other words, even if you have income above the median income, the answer to the question “Do I make too much money for Chapter 7” is only…. Maybe. Read further, to understand why.

Passing The Means Test

The Means Test is simply a way to show the court that despite having income above the median, you should still be entitled to relief in bankruptcy. Bankruptcy attorneys spend their days examining income and expenses for households, in an effort to see if the clients will pass The Means Test. Because this requires very specific information about your family’s monthly income and expenses, you’ll need to provide some information to your Charlotte Bankruptcy Attorney in order to see if you pass The Means Test.

Most often, if you and your family can’t make ends meet despite having a decent income, you will probably pass The Means Test. Most bankruptcy clients we help do not have income below the median income. In fact, most clients in our office qualify for Chapter 7 by passing The Means Test.

Definition Of Income For Bankruptcy Purposes

It is worth mentioning that you need to work with a bankruptcy attorney when preparing your bankruptcy filing. The bankruptcy code defines income very broadly, and it’s important to capture and disclose all “income” when filing your bankruptcy petition. A failure to disclose income or any other information deemed relevant to the court can lead to negative consequences and your case may be dismissed.

Assets In Chapter 7

The bankruptcy code helps you protect assets by providing each individual with exemptions. Additionally, North Carolina has specific Bankruptcy Exemptions. These exemptions can be applied to your household goods, vehicle, money in bank accounts, etc. Lastly, when it comes to selecting values for your assets, there is good news– in most cases you assign a very low “Craigslist” or “Yard Sale” value to the assets. This means the exemptions allow you to protect more of your property. Not to worry, your bankruptcy attorney and staff do most of the work.

Other Concerns

If you are wondering “Do I make too much money for Chapter 7?” then you may also be concerned about whether you can keep a car in bankruptcy, or whether you can keep your house in bankruptcy. We have written articles about nearly every topic affecting Chapter 7 and Chapter 13 debtors—we hope you find the information on this site helpful.

Speak With An Attorney Today

At any time, if you’d rather speak with someone to get your questions answered, simply call us. Answering questions is part of the job and we’re here to help. You can reach us at 704.749.7747 or click for a FREE CASE EVALUATION and we will reach out shortly. During the time it takes to have a short phone call, you’ll get peace of mind and understand your options.