The success or failure of filing for a Chapter 7 bankruptcy hinges largely on factors such as the amount of your current debts, as well as your income and the nature of your personal property and real estate. Many people assume that if their income is too high then they will not be able to file for Chapter 7 bankruptcy. However, this is not necessarily true. William D. Schroeder, Jr., a Chapter 7 bankruptcy attorney, has compiled the following article to provide you with advice on how to determine if you are classified as an above mean debtor.
Factors that affect your income level
One thing to bear in mind is the fact that your living situation and location are factors in determining the impact of your income on a bankruptcy filing. For example, although a salary of $100,000 a year is considered high by the average person, if an individual with a large family is living in a high-expense area, such as Philadelphia, this kind of salary may not put you in the above mean category. Ultimately, what matters most is how far your money goes for your current living situation. In more technical terms, an above median debtor is considered to be someone with earnings that are higher than the state median for their family size.
In Pennsylvania, the state median income per family is $47,809 for individuals, $56,690 for a family of 2, $71,119 for a family of 3 and $81,961 for a family of 4; for families over 4, $8,100 is added for each additional member. A proper analysis of the bankruptcy law provides a good approximation for above median people. With the right approach and analysis many above mean debtors can still file a Chapter 7 to extinguish their debt. Consulting a bankruptcy attorney is the best way to determine if there is a way for you to get under your Pennsylvania state median.
Types of income
Despite the use of the state median described above, it is still possible to avoid falling into the high-income category even if your income seems to be above the Pennsylvania median. This is because not all of the forms of money you receive are taken into consideration when calculating your overall earnings. Examples include, irregular self-employed earnings and Social Security. Our bankruptcy attorney, William D. Schroeder, Jr. will help you determine your income level and suggest methods that can help you get below your state median.
Exemption for business owners
If you own a business then you have a bit more leeway to avoid falling into the high-income bracket. If over 50% of your debts are business expenses, then you are exempt from the means test. Business expenses must be documented and both your business and personal expenses must be clearly separated.
High income does not mean that you should rule out the possibility of filing for Chapter 7 bankruptcy. Using the knowledge and expertise of a bankruptcy attorney is critical before making a decision. Serving residents of the Philadelphia region, William D. Schroeder, Jr. will do everything he can to make your situation work.