Not everyone can file Chapter 7. While this is the more sought after chapter because of the quick discharge of 100% of qualified debt, the law in 2005 made it harder to file Chapter 7.
Generally, if you earn more than the state median income for your household size, you can't file Chapter 7. Household income includes your gross income as well as that of your spouse. Unless you are separated, your spouse's income will need to be included even if he or she is not filing with you.
Also, you may not file a Chapter 7 if you had filed another Chapter 7, where you received a discharge, within the last 8 years. For example, if you filed a Chapter 7 on August 10, 2005 and you received a discharge order, you may not file another Chapter 7 until August 11, 2013. If your case was dismissed and you did not receive a discharge, you may be able to file sooner depending on the reason for the dismissal.
Even if your gross income is greater than the state median income listed in the tables, we can often find deductions that will help you still qualify to file Chapter 7.
In order to determine if your income allows you to file Chapter 7, we will conduct a Means Test, analyze your paystubs and examine other evidence of income received during the 6 full calendar months prior to filing. The court will look at this window of time to determine if you qualify. For example, if you plan to file at any point in the month of August, the court will analyze your gross income from February 1 through July 30. The paystubs you will submit will have a pay date falling between these two dates. Generally, bonuses and other nonwage income will be annulized rather than being attributed to the month in which they are paid.
The Means Test is a 60 question document designed to determine, not only if you make too much to file Chapter 7, but what amount of your income is available for a Chapter 13 payment. In the Chapter 7 analysis, the test will determine if your income, less certain allowed expenses, is higher than the state median income for your household size.
To be sure that you qualify to file under Chapter 7, schedule your free consultation.