Can You Make Too Much Money for Bankruptcy?
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Can You Make Too Much Money for Bankruptcy?

Bankruptcy is designed for those whose debt level greatly surpasses their income. However, that does not necessarily mean that a steady paycheck can prevent you from filing for bankruptcy protection.

You can make too much money to file for Chapter 7 bankruptcy, but there are no maximum income levels that would prevent people from filing for Chapter 13 bankruptcy.

There are, however, maximum debt limits that may prevent individuals with millions of dollars in debt from filing Chapter 13.

To learn more about qualifying for bankruptcy, fill out the brief form below and arrange a free consultation with a local bankruptcy lawyer.

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You Can't Make Too Much Money for Chapter 13 Bankruptcy

Chapter 7 bankruptcy requires that an individual passes a means test, which usually limits Chapter 7 to filers who have relatively modest incomes.

Most people, though, can file for Chapter 13 bankruptcy, regardless of their income level. Chapter 13, which allows you to consolidate your debts into a single repayment plan, is designed for people with a steady source of income, regardless of its size.

There are some limits, however, on filing for Chapter 13. These include:

  • A filer must owe less than about $360,000 in unsecured debts, which may include credit card bills, medical debt, utility bills, or some personal loans.
  • A Chapter 13 filer must also owe less than about $1 million in secured debts, such as car loans or home mortgages.
  • The exact debt limits are frequently recalculated to reflect changes in inflation. A local bankruptcy lawyer can help you determine the current limits, as well as any local requirements.

So, Chapter 13 is widely available to most filers. The next section will address the limitations of Chapter 7.

You Can Make Too Much Money for Chapter 7 Bankruptcy

Eligibility for Chapter 7, as mentioned above, depends in part on your ability to pass the Chapter 7 means test. The means test works like this:

  • Median Income. If your monthly income is less than the median income in your state, you will likely automatically pass the test and can file for Chapter 7.
  • Further Calculations. If your income is more than your state's median income, you may still be able to file, but the means test becomes more complex. A key issue is whether you have enough disposable income after meeting necessary living expenses to pay off some of your debts.

Remember, though, if you do not pass the Chapter 7 means test, you may still be eligible to file for Chapter 13. Learn more about filing requirements by arranging a free consultation with a local bankruptcy lawyer today.

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