In order to qualify for a chapter 7 you must pass the means test. This is a form you fill out that lists your income and expenses and compares them to the median income/expenses for people in your zip code.
In order to determine what the maximum income is to get you to qualify for a chapter 7, we have to know some additional information.
First, you have to start with the county you reside in.
Second, you have to identify the household size.
Third, you have to identify the monthly gross income average for the last 6 months for the household.
Fourth, you have to compare those numbers to the median household numbers, listed below.
I am going to provide some basic examples to help you get an idea of what your maximum income could be.
Household Size 4 in Texas
The Applicable Median Family Income is currently $86,259. So, if you are a household size of 4 and make less than $86,259 then you would be able to pass the means test and qualify for a Chapter 7.
However, even if you are a household size of 4 and make more than $86,259 you still may qualify. The reason is, you get deductions for certain expenses. If you have car payments, mortgage payments, tithing, out of pocket healthcare, etc., you get deductions that can help reduce your disposable income and still allow you to pass the means test.
Household Size 1 in Texas
The Applicable Median Family Income is $50,902.00. If your gross income is less than that, then you would be able to pass the means test. But even if your income is higher, let’s say $60,000, you still may be able to qualify depending on your expense.
I have provided a list of the current gross income based on household size at the bottom of this blog for your reference.
Expenses and Deductions
Your deductions are based on a combination of your actual expenses and means test expenses. For instance, the means test is going to give you a food allowance based on your household size and county. Even if you spend double that, you will only get credit for the means test amount.
For things like healthcare, tithing, and mortgage expenses, you will get the actual amount you spend, if it’s higher.
Again, if your income is below the median income, you will pass the means test. The expenses and deductions come into play if you are above median income. About 50% of my clients are above-median income but we are still able to get them to qualify.
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