September 16, 2019

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How Much Debt is Required to Qualify for Chapter 7 Bankruptcy?

Eligibility for Chapter 7 bankruptcy is not based on a certain dollar amount of debt, but on your inability to make the monthly payments on your unsecured debts. If your income is equal to or below that state median, you qualify. If your income is too high, you may be able to pass the more complicated means test that compares your income and expenses to see if you make enough to pay the bills.


Your monthly income is determined by averaging your income for the last six months before filing. If that is equal to or less than the median income for a household of your size in your state, you qualify for Chapter 7. The median income fluctuates from year-to-year. Your bankruptcy attorney can help you determine if you qualify.

If Your Income is Too High

If your income is above the state median, you may still qualify but you’ll have to pass a more complicated test. The means test looks at your income and your allowed expenses to determine if you have enough disposable income to make monthly payments on your unsecured debts.

Many of your living expenses, such as food, are determined using national and local standards rather than what you actually spend to prevent debtors from inflating their “necessary” expenses based on living an expensive lifestyle. Examples of the allowable expenses deducted from your disposable income include:

  • Payments on secured debts, such as car loans and mortgages
  • Certain types of insurance, including health insurance
  • Health care expenses for yourself and your dependents
  • Child care
  • Care of the disabled, chronically ill and elderly in your household
  • Charitable contributions
  • Taxes

Learn more about Chapter 7 bankruptcy and your options by talking to an experienced bankruptcy attorney in your area.

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