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Do I make too much money to file for Chapter 7 bankruptcy?

With an abundance of information on the internet, both reputable and not, it can be difficult to determine if you qualify for Chapter 7 bankruptcy. Many sources speak about the necessity of a "means test" but do not provide actual income requirements.

In many instances, this is because the income caps vary depending on your state of residence. The maximum household salary limits can also change as a result of U.S. Census data. Income requirements have changed as of April 1, 2016. Find out if you qualify.

The first part of the means test involves the median income, which is determined by Census data from the Department of Justice's U.S. Trustee Program. If make less than the median family income for your household size, you are eligible for Chapter 7 bankruptcy. As of April 1, median incomes for Kentucky are as follows:

  • One earner: $41,382
  • Two earners: $48,856
  • Three earners: $57,125
  • Four earners: $69,676

For households beyond four people, add $8,400 for each individual. Eligibility is based on your income over the past six months.

If you exceed the median for your household size, you will then need to take the second portion of the means test. To do so you will need your monthly income for the past six months well as "allowable expenses" - such as rent, utilities, groceries and medical costs. The difference between your monthly income and allowable expenses is your disposable income. If this is low enough, you still may qualify for Chapter 7.

Bankruptcy can be a complex and detailed process. It is in your best interests to obtain help from a qualified bankruptcy lawyer to make sure everything is done correctly the first time you file.

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