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“ Craig D. Robins, Esq., has been a practicing Long Island bankruptcy attorney for over twenty-four years ”
Written by Craig D. Robins, Esq.Income is a very important factor in determining whether a consumer can file for Chapter 7 bankruptcy. However there is no ceiling or cut-off point for any particular salary level.
That is because the bankruptcy means test determines Chapter 7 eligibility, involving a number of different variables and calculations, income being only one of them. A high amount of income, by itself, is not determinative of precluding one from filing for Chapter 7 relief.
The means test not only looks at salary, but also looks at a debtor’s various expenses and other variables. The Means Test is Often the Key to a Successful Chapter 7 Bankruptcy Case .
Some debtors who have family incomes below a certain amount automatically qualify for Chapter 7 bankruptcy filing. See my post: Bankruptcy Means Test Figures To Be Updated for New York Consumers.
I regularly represent many debtor’s who earn over $100,000 a year. This year we’ve filed a great number of Chapter 7 cases in which the family income ranged from the 130,000 level to close to $200,000. Earlier this year I wrote a post entitled, Can You File Chapter 7 Bankruptcy on Long Island With a Family Income of $200,000 a Year?
Individuals with high incomes frequently pass the means test when they have several of the following situations:
• large family size
• one or more elderly relatives who are dependants
• large mortgages
• two car loans or leases with significant payments and many months remaining
• significant contributions towards health or life insurance
• significant child-care expense
• large amounts of non-dischargeable income tax debt
All of the above variables act as means test deductions that enable consumers with high incomes to reduce the amount of their disposable income, which is the key factor in ascertaining Chapter 7 eligibility.
For those with high income, preparing the means test and evaluating the results is the only way to determine if they are eligible to file for Chapter 7 bankruptcy. Also see my post: If I Make Over $100,000 a Year, Can I Eliminate Credit Cards Debts in Bankruptcy?
Finally, even if a consumer does not initially pass the means test, there is still hope for filing a bankruptcy petition: Options If You Fail the Bankruptcy Means Test .
More from Long Island Bankruptcy Law Firm Blog
- Seven Requirements You Must Meet to File for Chapter 13 Bankruptcy
- Good News for Consumers on Long Island — Chapter 7 Bankruptcy Will Be Easier to Qualify For
- Can Consumers Still File for Bankruptcy in New York?
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