You can eventually afford to repay your debts under Chapter 13 bankruptcy.
You need two numbers to determine Chapter 7 bankruptcy eligibility: 1) your """"average monthly income"""" for the six months preceding your bankruptcy filing, and 2) the """"median family income"""" for the jurisdiction in which you file (see table below). Your filing will not be presumed frivolous if your income is below the median family income. To compute your """"average monthly income,"""" you must add all of your income for the six months preceding your Chapter 7 bankruptcy filing and divide by six.
Typical monthly income
To calculate this amount for purposes of Chapter 7 bankruptcy, you must include the following forms of income:
- salaries, gratuities, and commissions;
-gross income from an enterprise, profession, or property;
- dividends, interest, and royalties;
- pensions and retirement income;
- rental income and other income from real estate;
- compensation for employees;
- disability insurance;
- unemployment compensation;
- child support or alimony;
- pension disbursements
- unexpected riches (such as lottery winnings).
The following categories of income are NOT required for the Chapter 7 bankruptcy ""average monthly income"" calculation:
- Social Security pension payments;
- Social Security Benefits;
Social Security Disability Benefits;
Additional Social Security Income;
- Temporary Assistance for Families in Need;
- refunds of income tax
- payments made to you as a victim of domestic or international terrorism.
After calculating your average monthly income, you must compare it to the state's """"median family income"""". If your average income exceeds the applicable figure in the data below, you may be required to file for Chapter 13 bankruptcy rather than Chapter 7 bankruptcy. In order to ascertain your eligibility for Chapter 13, you must perform a series of calculations known as the ""means test.""
Income median for bankruptcy calculations
The median family income figures fluctuate roughly twice yearly. In the most recent updates to these figures, the median income in California and several other states decreased. There are no definitive court guidelines for determining the size of your household, but the majority of courts use the census methodology, which allows you to include everyone who resides in your home or apartment, regardless of whether they are your relatives or tax dependents. However, roommates are not household members unless you operate as a single economic unit by combining funds and sharing expenses. The issue of children residing with you part-time as part of a joint custody arrangement is more complex and must be determined on a case-by-case basis.
As of February 1, 2012, the median annual family income for a one-earner family in California is $47,683, while it is $61,539 for a two-earner family and $66,050 for a three-earner family. Note that the figures above represent annual revenues, whereas you must calculate your six-monthly income.
You have previously received a bankruptcy discharge or dismissal of your case.
You cannot discharge your debt in Chapter 7 bankruptcy if: 1) you received a discharge in a prior Chapter 7 case filed within the last eight years, or 2) you received a discharge in a previous Chapter 13 case filed within the last six years. If you have paid at least 70 percent of your unsecured obligations through a Chapter 13 bankruptcy discharge, the six-year rule does not apply.
You are ineligible for a Chapter 7 bankruptcy discharge if your prior Chapter 7 or Chapter 13 bankruptcy case was dismissed within the past 180 days for one of the reasons listed below. 1) You violated a court order, or 2) you asked for the dismissal after a creditor asked for the automatic stay to be lifted.
You have not engaged in required credit remediation.
Credit counseling is a simple requirement, so don't let this minor roadblock hold you down.
Fraud
You may be ineligible to file for bankruptcy if the trustee discovers evidence that you gave away your assets to relatives, friends, or favored creditors shortly before filing, purchased luxury items, or engaged in other suspicious behavior. Additionally, voluntary unemployment and the inability to explain how you came to where you are and where your money went will raise red flags.
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