How to File Bankruptcy When I Make More Than the Mean
To file for Chapter 7 bankruptcy protection, you must meet certain income guidelines. Some people who file Chapter 7 bankruptcy qualify by demonstrating that their income is less than the average income for residents in their state. If your income exceeds this amount, you may wonder if you can still file. There are many people who make more than the average income, but who can still file for bankruptcy protection.
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Instructions
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Gather information about your income and expenses. Document how much you earn (both before and after taxes and deductions) and how much you spend for housing costs, groceries, transportation and other expenses.
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Determine which expenses you can deduct from your income to qualify for the Chapter 7 "means test." The means test determines if you have sufficient disposable income left over after deducting allowable expenses to repay some of your debts. If you have excess disposable income, you fail the means test and cannot file for Chapter 7 bankruptcy protection. Allowable expenses vary by state, so check with a local attorney to find out how much you can deduct.
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If you pass the means test, consult your attorney to begin the process of filing Chapter 7 bankruptcy. You will need to provide information about your creditors, employer and debt amounts. Your attorney will handle filing the necessary paperwork with the Bankruptcy Court on your behalf. As long as no creditors object to the bankruptcy filing, you can be free from most of your debts in as little as 3 months.
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If you do not pass the means test, you still have another option-Chapter 13 bankruptcy. This type of bankruptcy does not wipe out your unsecured debts, but it does give you an extended time period to pay off a portion of your debts. If you make timely payments under a Chapter 13 plan for 3 to 5 years, the remainder of your debts will be forgiven.
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Tips & Warnings
Passing the means test for Chapter 7 bankruptcy does not necessarily mean that Chapter 7 is your best option. Check with your attorney to discuss the advantages and disadvantages of bankruptcy, so you can make an informed decision.
Don't omit income when using the means test or filing Chapter 7. At best, the court will dismiss your case and you will lose your attorney's fees. At worst, you could incur criminal penalties including fines or incarceration.
