You may feel like there is never enough money to pay all of your bills. Dave Ramsey often cites to the statistic that nearly 80% of Americans are living pay-check-to-pay-check.
When money is tight, even a small amount of debt can put a lot of stress on a family.
A question many people struggling debt have is whether they even have enough debt to justify filing for bankruptcy.
Most are surprised you aren’t required to have any debt to file for bankruptcy (although it is difficult to think of a reason you would want to file bankruptcy without a debt problem).
In most cases, the amount of debt you have is irrelevant to your overall eligibility to file a Chapter 7 bankruptcy. Bankruptcy is a good option when there is no real ability for you to repay your debt.
The bigger factor in determining if you can eliminate your debts through Chapter 7 bankruptcy is the number of people in your household and how much money you make.
How Does My Income Impact Filing for Chapter 7 Bankruptcy in Arizona?
Back in 2005, the rules governing bankruptcy cases changed. Since then, if you need to file for Chapter 7 bankruptcy you must pass the “means test”. In determining whether you qualify for Chapter 7 bankruptcy, it is necessary to look at how many people live in your household and what the total household income is.
This amount varies from state-to-state and is updated frequently.
Here in Arizona, as of January 2020, you will qualify for Chapter 7 bankruptcy if your income is at or below the numbers listed below:
Household Size – Annual Gross Income/Monthly Gross Income
1 – $51,338/ $4,278
2 – $64,543/ $5,378
3 – $70,428/ $5,869
4 – $85,403/ $7,116
5 – $94,403/ $7,866
6 – $103,403/ $8,616
7 – $112,403/ $9,366
8 – $121,403/ $10,116
Quick Tip – In determining your household size you should count the total number of people living in your home. Not just people in your immediate family. If you are married and have 4 children living at home and your mother-in-law lives with you as well, then you would have a household size of 7. Further, when looking at income you need to use your gross income, meaning your income before any deductions are taken out.
What If We Make Too Much Money?
If your income is over the amounts listed above you may still be able to qualify for Chapter 7 bankruptcy. It really helps to have a bankruptcy attorney to help you make this determination.
There many things that can be deducted from your income that can help you qualify for Chapter 7 bankruptcy. Here are just a handful:
- Mortgage Payments
- Car Payments
- Health Insurance
- Required Retirement Contributions
- Medical Expenses
If you are needing to finally deal with your debt problem, don’t lose any more sleep. Give me a call and we can sit down and put together a plan on how to eliminate your debts once and for all.
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John Skiba, Esq.
We offer a free consultation to discuss your debt problem and help you put together a game plan to eliminate your debt once and for all. Give us a call at (480) 420-4028