Many people think that they cannot get bankruptcy services if they earn a lot of money. While that assumption makes sense, it is not accurate. Even people that have what looks like a high income may not have the money they need to pay their debts. However, not everyone can qualify for filing bankruptcy and whether or not you do depends on several factors beyond simply what you make.
The court system will look at additional factors when determining if you make too much money. For example, they will consider your family size. This is taken into consideration because of how expensive it is to have a larger family. For example, two people may only spend $500 a month on groceries but a family of six may spend $1,100. How far your money will stretch depends on the size of your family and where you live. For example, people that live in the city center will spend much more on their housing than people living in the country. All of this is taken into consideration.
As part of our bankruptcy services, we will evaluate how much money you make and whether or not it is within the limit for where you live and your family size. As a general rule of thumb, a high-income debtor is someone that makes more than the median income for their state and family size. This way someone in Utah is not compared to someone living in California where the cost of living is much higher. As long as you are at or below the state median then you should be able to file for a Chapter 7 bankruptcy.
In a Chapter 7, all or most of your debts can be discharged. This is what most people refer to as a clean slate bankruptcy because all of your debts are wiped out. If you are above the state median income, you will typically have to file a Chapter 13. This can, however, be argued and as an expert at providing bankruptcy services, we have successfully done so.
The best way to argue it is by taking the means test. In this test, you will provide additional information that will shed light on your income and expenses in order to demonstrate why you should qualify for a Chapter 7. For example, if you have a lot of medical bills that you are making payments on, this would reduce how much money you have to spend on other things or if you have elderly parents that you are taking care of financially even though they don’t live in the home. The more information you can provide, the better as it will help us to make a case for why you should be allowed to file a Chapter 7.
If you are active duty in the military or National Guard, you are generally exempt from completing the means test. This has helped many service members to avoid filing a Chapter 13 so if you are in the military let us know during your consultation.