Whether you qualify for bankruptcy certainly involves an examination of your income. Your income alone though, is not typically what determines whether you have the ability to file a Chapter 7 or a Chapter 13 bankruptcy. Instead of looking at just income, your attorney—and later the bankruptcy court—are looking for the balance that exists between your income and your monthly expenses.

Qualifying Automatically

There are minimum thresholds for income, which may automatically qualify you for bankruptcy. This is referred to as The Means Test in bankruptcy. In other words, if you make less than a certain amount per year, it doesn’t matter what your monthly debts are, you qualify and have the option to file. If you make more than that threshold income amount, this is where your Charlotte bankruptcy lawyer helps you determine if you’re still eligible.

I talk to people every day who don’t pass The Means Test. But the debt they are paying on each month makes them eligible to file! By the way, it’s that same debt that will ultimately be discharged in bankruptcy and give you the ability to once again live a healthy financial life.

Below are the income thresholds in North Carolina which are used for The Means Test. Find the number of people in the household that applies to you, and look at the income figures on the right. If you make less than that amount, you automatically qualify under The Means Test. If you make more than that amount, you and your attorney will compare your income to your expenses to see if you can still qualify.

The number of household members includes children, parents, or anyone else who lives in the home.

Household Annual Income Monthly Income
1 Person $37,892 $3,157
2 People $48,710 $4,059
3 People $54,310 $4,525
4 People $65,036 $5,419
Additional Persons $7,500 each $625 each

 

I Don’t Pass The Means Test. How Much Monthly Debt Do I Need?

When the amount of money going out each month exceeds the amount coming in, you are usually able to qualify for a Chapter 7. Chapter 7 is an expedited bankruptcy process that ends calls from creditors within one week after filing the bankruptcy petition with your attorney. If you do not qualify for a Chapter 7, a Chapter 13 is an option. This option involves making a (MUCH smaller) monthly payment to the bankruptcy court, and that payment is divided among your creditors. Once you make all of your payments, the debts are discharged.

Any competent bankruptcy attorney in Charlotte, NC can help you over the phone or in person, in quickly figuring out whether you qualify for a bankruptcy. Then, with your attorney’s help, you can decide if it’s the right option for you.

Email me at chris@thelaytonlawfirm.com or call me today at 704.749.7747 to discuss your options. One call is all it takes to begin the path to financial freedom.