Chapter 7 Income Guidelines
Aurora Illinois Bankruptcy Lawyers & Attorneys
Jesse Barrientes: Is there a particular guideline, Dave, in terms of an amount of money that somebody can make before they can file?
David Siegel: Yes. Each date has a median depending on the family household size, so for one person right now the median in Illinois is approximately $46,000.00, and for two people it goes up a little bit from there, so if somebody is making less than that amount, they technically qualify under the first prong of bankruptcy. The other prong is they must not have available money from income minus expenses. There cannot be anything left, otherwise they don’t qualify for Chapter 7 as well.
Jesse Barrientes: Let me ask you – a chapter 7 bankruptcy lawyer in Aurora – actually, I have a bunch of questions for you, but let me ask you this. What happens if they're a little bit over that standard guideline, and let's say they're maybe about 5 or $6,000.00 over that? Does that necessarily mean that they're not going to be able – we'll talk about the other requirements that you have to meet, but just looking at that one, does it mean necessarily that they won't be able to file a Chapter 7?
David Siegel: Not necessarily. The number I gave you involves the median income to qualify. If someone is over that median income, they still may qualify, but they still have to pass what's called a "means test." In other words, if someone has the means to pay back their debt, they're not going to be granted a Chapter 7 fresh start. This means test is a mathematical calculation that has to do with a lot of different factors. In addition to your income, it has to do with what type of secured debt you have, whether you're paying on a mortgage, whether you're paying on a vehicle, what other expenses you might have.
It's very possible somebody can be over the median and still qualify for Chapter 7. Obviously the closer to the median they are, the more likely they're going to pass, but in some cases we see people way over, and because of their high-secured debt, have qualified for Chapter 7 bankruptcy, which is the fresh start.
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See Also:
Chapter 7
Misconceptions about Chapter 7
Life after Chapter 7 bankruptcy
Privacy is protected in bankruptcy
Household income qualifications
Converting Chapter 13 to Chapter 7
Converting Chapter 7 to Chapter 13
Chapter 13
Using Chapter 13 to save a home
Choosing Chapter 13 versus Chapter 7
Debt consolidation & late fees
Administrative fees & the bankruptcy trustee
Chapter 13 payment plan dismissal
