• DYE CULIK PC | Consumer Protection Division

Fresh Start With Chapter 7 Bankruptcy? Here’s How To Qualify


The first step in determining your eligibility is to calculate your household income. This calculation generally factors in all income that you received over the past six months, except for money received from Social Security. The average month over this period is then multiplied by 12 in order to determine your yearly income.

Your yearly income is then compared with the median annual income for your household size. If your household income is below this amount, then you automatically qualify for Chapter 7. For example, the median income for a household of 4 is currently $103,624. If you are a household of 4 with an annual income of $95,000, then you automatically qualify for Chapter 7.

If your income is above the median income, then an examination of your expenses is needed in order to determine if you qualify. From your monthly income, you will deduct a mix of actual expenses and assumed expenses based on IRS National Standards. After these expenses are deducted, the form will determine if you have any disposable income available to pay to creditors in a Chapter 13. If you do not have a significant disposable income available, then you are eligible for a Chapter 7.

Lastly, even if the expenses deducted from form determine that you are not eligible for a Chapter 7, you may be able to claim special circumstances in order to qualify. For example, if you were recently laid off from work, this could be used to demonstrate eligibility.

These eligibility standards can be very complex in some cases. For a free bankruptcy consultation customized to you, Contact Us today.

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