I is for Income

Posted By Tom Hensel || 6-Jan-2013

Income is one of the most important factors to examine when determining bankruptcy options. Income determines if you'll be eligible under Chapter 7. In the context of Chapter 13, it will dictate how long your Plan must last for – as well as how much money you may have to pay back to your creditors.

Since I've been practicing bankruptcy law, I've had clients who have had incomes of $0 and I've had clients who've earned well over $150,000+ annually.

I often receive phone calls and emails from people who think they may make too much money to file some sort of bankruptcy. This is a common misconception. In determining eligibility for Chapter 7, we don't look strictly at your income. We look at your income relative to the size of your household and how many dependents you have. For example if you're single and have no children and make $70,000 annually you will likely not be eligible to file under Chapter 7. However, if you make $70,000 annually and are married with three children you may indeed be able to file under Chapter 7.

There is no cap on how much income you can earn and still qualify for relief under Chapter 13 – as Chapter 13 is a reorganization type of bankruptcy where a portion of your debts are repaid based on ability to repay.

So regardless of what your income situation is, bankruptcy can make sense for you – depending on what your debt situation looks like. If you're interested in speaking with an experienced bankruptcy attorney to determine your options, feel free to get a hold of me.

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