Friday, November 8, 2019

What is the Income Limit for Filing Chapter 7 Bankruptcy in Georgia?

In order to file a Chapter 7 bankruptcy, you must pass a means test which compares your disposable income to the average median income for a family of the same size in Georgia.

What is a Means Test?
A Chapter 7 bankruptcy is a short process, typically lasting no longer than six months. The Chapter 7 means test is a method of qualification designed to reserve Chapter 7 bankruptcies only for those who truly can't afford to repay their debts in full. Your bankruptcy attorney will walk you through the process to ensure things go smoothly.

Taking a Means Test
To begin a means test, compare your annual income to the median income for the same size household in Georgia. If you make less than your state’s median income, you qualify and are free to file a Chapter 7 bankruptcy (presuming all other eligibility requirements are met). If you make the same, or more than, the median income for Georgia, then you must continue on with the test. In part two of the bankruptcy means test in Georgia, you use your monthly income for the six months before you plan on filing bankruptcy. By deducting your monthly expenses from your current average monthly income, you calculate your disposable income. The lower your disposable income each month, the more likely you may qualify for Chapter 7. The Means Test can be very very complicated. Your bankruptcy attorney will help you accurately prepare your Means Test. 

What Happens If You Don't Qualify for Chapter 7 Bankruptcy
If you don’t qualify for a Chapter 7, you can file a Chapter 13 bankruptcy instead. A Chapter 13 is known as a repayment bankruptcy and can help you repay your debts over either a three-to-five year period.

If you're thinking about filing bankruptcy, but aren't sure if you should move forward, call King & King at 404-524-6400 to schedule a free consultation with an attorney. King & King is dedicated to helping clients file for personal bankruptcy and rebuild their lives afterwards.