Q: How do I find out if I make too much money to file bankruptcy?

A: There are two forms that must be completed so the office of the United States Trustee can determine if a bankruptcy debtor's chapter 7 filing is an abuse of the system. One is called the means test and the other is schedule I & J in the bankruptcy schedules. I have met with a significant number of clients since 2005, when completion of the means test was made a requirement of bankruptcy debtors, that came to me believing that they would have to file a chapter 13 case because they did not understand all the deductions that they could take on the means test. Our firm filed chapter 7 cases for these clients and was successful in helping the clients receive their chapter 7 discharge. We have met with other clients that thought they needed to file a chapter 7, but after a thorough review of their financial situation and an explanation of how chapter 7 and chapter 13 would work for them, those clients decided to file a chapter 13 instead.

The point of this is that the best way to find out the answer to your question is to take the time to meet with an experienced bankruptcy attorney that handles chapter 7 and chapter 13 cases. Most attorneys will meet with you at no charge for the initial appointment. You can use the Justia "Find a Lawyer" link at the top of this page to search for an attorney.

A: The Chapter 7 means test involves several steps, but the first is simply to compare your income to the median income in your state for a family the same size as yours. Most people who earn less than the median are eligible to file Chapter 7 bankruptcy. But, the analysis doesn't end there. Some people who earn more than the median are still eligible if their debts are very high in comparison with their disposable income.

As a practical matter, most people who want to file Chapter 7 bankruptcy are eligible. For those who aren't, Chapter 13 bankruptcy is usually an option, so it's extremely rare that a person in need of bankruptcy protection would be excluded based on income.

*Kevin Chern is an Illinois licensed attorney who has practiced in federal consumer bankruptcy law and consumer protection law for the last 21 years. He is the Managing Partner of UpRight Law. Kevin's law partners are licensed in all 50 states and work in conjunction with Mr. Chern to provide bankruptcy and consumer legal services in all 50 states. Mr. Chern's answers to the questions are intended for informational purposes only and are not intended to be legal advice. Use of the answers does not establish any attorney-client relationship. For legal advice, you should consult with an attorney licensed to practice law in your state and with appropriate expertise.