You’re afraid to answer the phone. You get calls from collection agencies every single day. And now, your creditors are even calling you at work.
Filing for bankruptcy will end the calls and give you a fresh start. However, there are income limits for chapter 7 bankruptcy in Minnesota.
For some households, figuring out their eligibility for chapter 7 is a fairly straightforward process. For other households, it’s a little more complicated. Following these three steps will help you determine if you can file chapter 7 bankruptcy:
- Compare your household’s income to Minnesota’s median income. If it’s less, you can file for chapter 7 bankruptcy.
- If your household income is more than the state’s median income, it doesn’t necessarily mean you can’t file chapter 7. You will have to fill out an additional form called a means test to determine your eligibility. Walker & Walker does this form for our clients at no additional cost. It is detailed, but we can often find ways to qualify people for chapter 7 even when they are over the median income.
- Certain circumstances may make higher income households exempt from the means test. These include having business-related debts and serving in the military.
What is Minnesota’s Median Income?
Effective May 1, 2019, the median household income in Minnesota is:
One person: $58,443
Two people: $76,398
Three people: $94,312
Four people: $111,878
If your household has more than four people, add an additional $9,000 for each person.
Each state has its own median income. Minnesota’s may be higher or lower than other states. Median incomes are periodically updated and are subject to change.
My income is less than the median income. Can I file chapter 7 bankruptcy?
Yes. If your household’s income is less than the median income, you qualify for Chapter 7 bankruptcy. A bankruptcy attorney can help you decide if this is the best option for you.
My income is more than the median income. What are my options?
If your household’s income is more than the median income, you aren’t automatically disqualified. You will need to fill out a form called a means test. If you don’t qualify for chapter 7, you may still qualify for chapter 13 bankruptcy. Chapter 13 is like a court-supervised payment plan. You pay what you can afford for 3 to 5 years, and whatever doesn’t get paid back gets discharged at the end. You never pay back all of the debts completely. Usually they get 10 to 15% paid back.
What is the Chapter 7 Bankruptcy Means Test?
The means test is a form that asks for more information about your household, income, debt, and expenses.
The information you provide will determine if you can file chapter 7 bankruptcy. It’s important to have an experienced attorney help you with the process.
Are there Exemptions to the Means Test?
Yes. There are certain circumstances called means test exemptions.
- Your debts are primarily business related and not consumer related.
- If you served or are serving in the military, you may be exempt from the means test.
If your income is higher than the median income and you have one of these exemptions, you may qualify for chapter 7 bankruptcy.
The Twin Cities Bankruptcy Experts
As you can see, the answer to, “What is the income limit for chapter 7 bankruptcy?” doesn’t exactly have a straightforward answer. Let Walker & Walker Law Office guide you through this complex process.
If you’re wondering if chapter 7 bankruptcy is right for you, contact us today. Our phones are answered by live, knowledgeable people. If you get us after hours, we will call you back the next day. We return emails and form submissions immediately during business hours.
Even if you don’t qualify for chapter 7 bankruptcy, you may have other options for debt relief. You can stop the creditor phone calls and get a fresh financial start.