Can I File Bankruptcy With a High Income?

Have you heard that you can’t file bankruptcy because you make too much money? Most of the time, this isn’t true.  Both income and debts are taken into consideration when filing for bankruptcy.  And many people who think they make too much money are actually perfect candidates for Chapter 13 bankruptcy (and may actually qualify for a Chapter 7 bankruptcy).

How Can I Know If I Qualify?

First, you’ll have to actually calculate your income.  If you make under California’s median income for your household size, you should qualify for a Chapter 7 bankruptcy.  If you make more, then you’ll likely only qualify for a Chapter 13 bankruptcy, as determined by the bankruptcy means test.

This test will help to determine if your income is high enough to repay your creditors.  If the test shows that you don’t earn enough to pay off your debts, then you’ll qualify for a Chapter 7 bankruptcy.  And if your income is high enough to repay your debts, then you’ll have to file a Chapter 13 bankruptcy and pay back some portion of the debt to your creditors over a 5 year period.  The means test also takes necessary expenses and household size into consideration.  Knowing whether or not bankruptcy is the right way to go isn’t always clear.

To find out how your income, expenses, and household size will play into what type of bankruptcy you qualify for, contact your Yuba City bankruptcy attorney at (530) 797-4402.