Many people are not sure if they make too much money to file for bankruptcy protection. It can be stressful to make a decent salary but to still be overwhelmed with debt. A Chapter 7 bankruptcy allows a debtor to discharge or eliminate unsecured debt such as credit card debt, medical bills and legal bills. Whatever your financial situation, this is a huge relief to everyone! In order to qualify for a Chapter 7 filing, you must pass the “means test.” This is simply a formula based on your average income over the 6 months before the case is filed compared to the state median for a family your size. If you had a higher salary in the past but recently experienced a decline, waiting a month or two before filing your case might drop your average gross income enough for you to pass the test. Even if your gross income is higher than the limits allowed, you can still pass the means test with allowable deductions. Examples of deductions include home costs, vehicle expenses and medical bills. There are many other allowable deductions, so it is important to confer with a New Jersey bankruptcy attorney to discuss your individual situation. Finally there are two groups of people who do not have to undergo the means test at all:
- People whose debts are “not primarily consumer debts” (business debtors)
- Disabled Veterans whose debts were incurred primarily while on active duty
If you fall under one of these two exceptions, you can earn more than the above limits and still obtain the Chapter 7 discharge of debts. If you do not qualify to file a Chapter 7 case, you can still obtain the benefits of bankruptcy by filing a Chapter 13. In some cases, a Chapter 13 may be preferable even if you do pass the means test. To learn more about filing for bankruptcy protection, call Levitt & Slafkes to schedule your initial consultation. We are bankruptcy lawyers who know how to make a difference in your financial situation. We have experience you can rely on and we care about your results. Contact our New Jersey law firm online by filling out the form or by calling 973-323-2953 to schedule a free initial consultation with an attorney at Levitt & Slafkes, P.C..