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Income Requirements to File for Chapter 7 Bankruptcy

Income Requirements to File for Chapter 7 Bankruptcy

You may be wondering how much debt you need to have in order to file bankruptcy in Ohio. If you are considering filing for Chapter 7 bankruptcy in Ohio, you must pass the state’s means test.

If your income falls below the Ohio median for the size of your household, you automatically pass the test. In most instances clients that are below the median household income are able to file for Chapter 7; however, other circumstances may require you to file for Chapter 13 bankruptcy. In addition, you are exempt from the means test if your debts are not, for the most part, consumer debts.

If, however, your income is higher than the Ohio median, you are presumed to be unable to file a Chapter 7. Further calculations must be made on your gross income in order to see if you qualify for a Chapter 7 bankruptcy or if you must file a Chapter 13 bankruptcy.

What is the median income?

You can calculate your average household income by determining your average monthly income over the past six calendar months. If you are over the median income limit and you have seen your income decline in the last six months, you might be better off waiting a month or two before your income falls below the median level. This may give you a better chance of passing the means test.

After you have determined your average monthly income, simply multiply by 12 to determine your yearly income for the purpose of the means test.

The following are the current income thresholds you must fall below to pass the Ohio means test, organized by household size. These numbers are subject to adjustment every six months:

  • One person: $45,666
  • Two people: $57,216
  • Three people: $67,509
  • Four people: $82,005
  • Five people: $90,405
  • Six people: $98,805
  • Seven people: $107,205
  • Eight people: $115,605
  • Nine people: $124,005
  • 10 people: $132,405

If you do not pass the means test, your total gross income can be reduced by the living expenses that are permitted by the United States Trustee’s program to come up with your disposable monthly income. This disposable income is what is used to determine whether you qualify for Chapter 13 or Chapter 7 bankruptcy.

For more information and guidance on determining your Chapter 7 eligibility in Ohio, meet with a skilled Dayton bankruptcy attorney at Fox & Associates Co., L.P.A.

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