What is the Income Cut Off for Chapter 7 Bankruptcy?

Determining which type of bankruptcy will work best for your circumstances can be challenging. One of the best ways to decide whether or not you pass the means test and qualify for a Chapter 7 Bankruptcy is to speak to an experienced Los Angeles bankruptcy lawyer.

The means test allows applicants to determine whether their income exceeds the limit for filing for a Chapter 7 bankruptcy. You will need to file two different forms to decide whether or not you passed the bankruptcy means test. You may be exempt from having to pass the means test. In that case, you will need to file a Statement of Exemption.

Calculating Your Total Annual Income

An essential part of the means test for Chapter 7 bankruptcy is calculating your total annual income. You will need to add up all of the gross income you have received for the last six months from every source. Your gross income will be listed on your pay stubs as the amount you made before paying taxes and deductions. You will also need to add in any other types of income you received, such as:

  •  Spousal support or child support
  •  Income from businesses you own
  •  Income from work you have done as an independent contractor
  •  Income from investments you own, such as stock dividends
  •  Retirement income
  •  Unemployment
  •  Any other income you may receive

You may need to look through your bank statements to record all the income you receive, so you do not forget about any of it. Then you can divide each source’s six-month total by six to arrive at your average monthly income from that source. You will need to multiply your monthly income by 12 to arrive at your annual income. Next, you will need to compare your income to the state’s annual median family income for your household size. As of right now, the median household income for California is as follows:

  • 1 Member Household – $47,798.00
  • 2 Member Household – $62,009.00
  • 3 Member Household – $66,618.00
  • 4 Member Household – $75,111.00
  • 5 Member Household – $83,211.00
  • 6 Member Household – $91,311.00

If your income is higher than the California median income for your household size, you will need to complete the means test by calculating your income and expenses. After you subtract your allowed expenses from your income, you can determine whether you qualify for a Chapter 7 bankruptcy. 

Contact our Bankruptcy Lawyers in San Diego Today

Chapter 7 bankruptcy is appealing to many people because, in the end, most of their debt will be wiped out. However, there is a means test that applicants must pass before they can file for Chapter 7 bankruptcy. At the Bankruptcy Law Center, We will carefully review your situation and your goals to help you decide whether to file for Chapter 7 or Chapter 13 bankruptcy. Contact us today to schedule your initial consultation.

How to File for Student Loan Bankruptcy | Bankruptcy Law Center

How to File for Student Loan Bankruptcy

In the United States, the average student loan debt is $32,731. Since 2016, the average amount of student loan debt has increased by 20%. Additionally, over 600,000 borrowers owe over [...]
Read more
How Many Types of Bankruptcy are There? | Bankruptcy Law Center

How Many Types of Bankruptcy are There?

There are six different types of bankruptcy under the United States Bankruptcy Code. The name of each type of bankruptcy is the chapter of the Bankruptcy Code, in which it [...]
Read more

See What Our Clients Have To Say

Yelp Review

Roger C.

I reached out to BLC to help assist with a chapter 7 business bankruptcy and they provided excellent guidance, advice, and support through the entire process. In my case an adversarial action was filed by one of the creditors and attorney Ahren Tiller and his staff provided sound ...arguments which prevailed. Couldn’t have found a more experienced and supportive team to represent me in a tricky situation. I would highly recommend them to anyone making the difficult but sometime necessary decision to find financial relief. Read more
Yelp Review

Justin R.

Like many others before and during the pandemic, life happenings caused me to be in a financial situation to warrant bankruptcy. The BLC was super professional all the way through the entire process. Right after I paid for my Bankruptcy, I got sick and had to have surgery and recovery. Then we ...were in full Pandemic mode. They were gracious to delay my filing until I was recovered and ready to file. I could not ask for more. The process was over all quick and painless for a simple Bankruptcy like mine. I feel a weight has been lifted and I can rebuild. Thank you for all your arduous work and patience, Gabriel, Ahren, and their teams are knowledgeable and efficient. Read more
Google Review

Katey Huntley

Responsive, friendly, kind, extremely easy to work with! So knowledgeable and made this entire process painless. Very grateful!

Google Review

Lynn Molina

Gabriel Hanna, Esq and the staff at BLC helped me in a very difficult time. I appreciate all the help and care they gave my case.

Google Review

Linda Cramer

I can’t say enough of how much this bankruptcy law firm helped me with my financial situation. They were all so helpful, efficient and made the difficult time and process as quick and easy as possible. I would recommend them to anyone I know and am glad to give my public recommendation as well. T...hey truly deserve a five star plus rating. Read more
Yelp Review

Andrea N.

I am very happy with my experience with BLC. Bankruptcy is not something anyone wants to go through, however everyone at BLC made my experience pleasant and easy. The process was explained thoroughly and I had an easy time reaching out and connecting with my attorney. Anika Renaud-Kim was my attorney ...and she was nothing short of amazing! She was very patient and generous with her time. Ms. Renaud-Kim definitely made me feel at ease and comfortable through the entire process. Read more
Facebook Review

Lidia Paramore

they did a great job for me, helped me anytime I needed something, my Lawyer Gabriel Hanna is the best, gave lots of confidence all the time..thanks BLC I will.always recommend you, I’m very grateful for your service!!!

Yelp Review

Rachael C.

When searching for information I had called a few different firms and received consults. BLC was the only one who didn’t shy away and provided answers and information during the consult. Once I agreed to move forward, they were supportive, informative, and eased my anxiety through the whole process.... I can’t recommend them enough. Read more
Google Review

Emily Martinez

AmazingI had many questions and uncertainties and the carefully explained it all and made it easy to understand. They facilitated a fast and easy process making this scary difficult thing simple

Ready To Eliminate Your Debt?

Bankruptcy is still the best option. Other debt plans make promises, but only bankruptcy delivers.

FREE CASE EVALUATION 

Logo

SAN DIEGO OFFICE

1230 Columbia St. #1100 San Diego, CA 92101

LOS ANGELES OFFICE

11500 Olympic Blvd., 4th Floor Los Angeles, CA 90064

VISTA OFFICE

380 South Melrose Drive #300 Vista, CA 92081
© 2022 Bankruptcy Attorneys. All Right Reserved.

Legal Disclaimer: The Bankruptcy Law Center is a California Licensed law firm with attorneys licensed in the state of CA, NY. Attorney Ahren Tiller is responsible for this advertisement. Bankruptcy Law Center’s principal office is located at 1230 Columbia st. Suite 850 San Diego, CA 92101. Prior results listed on this site do not depict or in any way infer a prediction or outcome.We are a debt relief agency proudly providing options to people with financial problems. View our Privacy Policy