Over the Median Income: Is Chapter 7 Still Possible?

It's a well known fact that you must be under median income in order to be able to successfully file a chapter 7 bankruptcy. What is lesser known is that it is still possible to file if you come in over the median. Doing so takes effort on the part of the filer to be completely honest with the court. Being less than honest will cause the court to consider you to be abusing chapter 7.

Coming to the Conclusion of Presumption of Abuse

The first step of preparing the petition is to work out your income for the past six months. This is not exactly a fair method for the filer as there may have been a bonus or a job loss that skews the total. The result will show an erroneous average of your income as it doesn't really reflect what your current financial situation.

To figure out your income, take the sum of the past six months worth of income and divide it by six. Then multiply it by 12 to come to the final amount. Compare the number against the median income for your state. If it is higher then the average, you are in the area of presumption of abuse.

Rebutting the Presumption

Facts are facts in a bankruptcy and there is no changing the reality that you are over the median. This is the part where you show the court that you are not abusing chapter 7. Laying everything out on the means test to show that you have very little left over every month is key to being able to move forward.

Form B22A titled Statement of Current Monthly Income and Means Test Calculation - For Use in Chapter 7 is the specific form you must use for a rebuttal. Pay close attention to each question as they apply to your situation. Parts one through three are preliminary to the rest of the form. Line 15 will show a higher income than median which means you will have to move on to the next four parts to demonstrate where money is distributed to each month. The form will guide you to the acceptable answers via different links to websites in each question.

Consulting a Bankruptcy Lawyer For Guidance

The importance of at least talking to a lawyer cannot be stressed enough. Don't take the leap into bankruptcy until after you've talked with one. It's tricky to file a chapter 7 when you're over the median, putting you at risk of abuse if not done right. A bankruptcy lawyer will know what it takes to see you through a successful filing to discharge and keep you out of chapter 13.

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