Are There Income Limits to File Bankruptcy?

There are income limits for a chapter 7 case, but if you're above the limit that doesn't mean you can't file. What it does mean is that you must be able to pass the means test to qualify for a chapter 7 discharge.

If you are leaning towards a chapter 13, then you really don't need to worry about qualifying based on your income. You do, however, need to consider your income and expenses to find out how much the payment plan will entail paying each month.

The income limit imposed by the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) requires that any petitioner seeking a chapter 7 debt discharge prove a "need". What this means is that if your income is above the median income for your state and family size, you will need to complete and pass the means test.

First Step: Check Your States Median Income
Find your state in the chart below, and you will see three income numbers based on the number of people in your household. If your household income is above the median, you must take the means test.

One	Two	Three+		One	Two	Three+
AL	$38,018	$70,015	$85,621	MT	$37,954	$68,000	$88,037
AK	$51,112	$89,785	$118,346	NE	$38,287	$70,309	$88,339
AZ	$41,915	$74,461	$92,045	NV	$42,346	$76,027	$96,008
AR	$32,304	$63,508	$79,668	NH	$50,630	$86,462	$106,235
CA	$47,234	$86,906	$97,571	NJ	$58,107	$102,955	$119,698
CO	$47,814	$83,137	$98,864	NM	$36,672	$69,503	$84,915
CT	$56,929	$100,833	$117,818	NY	$45,548	$88,327	$109,333
DE	$47,634	$85,535	$107,920	NC	$37,171	$72,194	$85,472
FL	$39,383	$69,898	$85,308	ND	$40,774	$72,786	$90,289
GA	$38,748	$75,790	$88,413	OH	$40,091	$74,488	$91,812
HI	$49,846	$86,149	$116,809	OK	$36,289	$68,361	$86,278
ID	$38,420	$62,729	$78,704	OR	$43,986	$72,113	$87,238
IL	$45,607	$83,149	$99,615	PA	$44,172	$78,250	$98,043
IN	$39,487	$71,299	$90,391	RI	$45,391	$86,886	$102,328
IA	$39,803	$72,320	$88,700	SC	$36,457	$69,729	$87,343
KS	$40,982	$72,680	$92,214	SD	$35,008	$66,399	$80,345
KY	$36,999	$68,960	$89,397	TN	$37,528	$68,357	$85,101
LA	$37,493	$74,933	$94,866	TX	$37,676	$74,750	$86,196
ME	$38,860	$69,347	$88,243	UT	$49,818	$67,893	$95,781
MD	$54,874	$102,736	$122,598	VT	$42,347	$76,056	$92,223
MA	$54,161	$98,513	$119,700	VA	$49,484	$88,825	$108,017
MI	$41,875	$74,517	$90,974	WA	$49,124	$84,439	$100,832
MN	$45,022	$81,592	$98,019	WV	$39,109	$67,419	$87,527
MS	$32,131	$64,262	$83,046	WI	$40,486	$75,608	$92,303
MO	$38,697	$71,181	$91,311	WY	$45,427	$76,314	$94,714

Source: USDOJ

If You are Below the Median
If your income puts you under the median in your state, then yours is a simple case. You can file for chapter 7 and get a "straight" discharge of your debts.

If You are Above the Median
If your income puts you above the limit for your state, then you will need to pass the means test to prove you are "not abusing" the bankruptcy laws before you can qualify for a chapter 7.

What is the Means Test?
The means test is a series of calculations designed to determine if you would be able (have the "means") to repay some of your debts in a chapter 13 case. Click here for the actual test form. You'll see it's a bit complicated (seemingly unnecessarily) but the end result is that your disposable income is calculated to figure out how much there is to pay towards your debt. It's much easier to print out the form and work it the "old school" way with a pencil and a calculator.

Learn More
Here are some related posts from this blog and articles on other sites:

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Who Can File for Bankruptcy?
What Does Filing Bankruptcy Do?
The "Should I File Bankruptcy" Test