If you earn a good living, you may be wondering if your income is too high to file Chapter 7.  Most people considering bankruptcy should be able to file under Chapter 7.  However, if your income is above the median family income in your state, you may be forced to file Chapter 13.  Higher income earners must complete a “means test” that requires detailed information about your income and expenses.  If the test shows that you have a certain amount of income left over that could be paid to unsecured creditors, then the bankruptcy court can decide that you cannot file a Chapter 7 bankruptcy.

The income cap for filing Chapter 7 bankruptcy is based on the median income in your state, your total household income for the past 6 months (prior to filing), and your household size.  Even if you are filing Chapter 7 bankruptcy alone, you would still have to qualify based on household income.

For qualification purposes, your income is calculated as your average gross income (before taxes) for the last six calendar months.  This excludes any benefits under the Social Security Act.  If you are married, your spouse’s income is included unless you complete separate tax returns and have declared separate households.  The state median income used for comparison is calculated by using:

• The Census Bureau’s figure for median personal gross income in your state,
• The number of people who have the same number of people in their household as you.
• This figure is adjusted for inflation since the last census.

Using the qualifications listed above, if your income is above the state median income, you do not qualify to file for Chapter 7 bankruptcy.  Be aware, however, that this calculation can be affected by various legal interpretations, such as whether unemployment compensation is a benefit under the Social Security Act.  Consult an experienced bankruptcy attorney to determine whether your income is too high to file Chapter 7 bankruptcy.