When considering filing bankruptcy, many debtors begin researching on their own what their options might be. To many, this means “google”-ing the word “bankruptcy” and seeing what results come up. By researching options in this way, it is easy to be mislead about which type of bankruptcy you might qualify for. Chapter 7 bankruptcy is the type of bankruptcy that most people are familiar with; this chapter of bankruptcy allows the majority of your debts to be discharged, or wiped out. A Chapter 13 bankruptcy involves a repayment plan over the course of three to five years. Knowing that there is a type of bankruptcy that wipes out all of your debts leads many debtors to want to file a Chapter 7. However, depending on your income, you may not qualify to file a Chapter 7 bankruptcy.
When determining if you qualify for a Chapter 7 or a Chapter 13 bankruptcy, your attorney will look at if you are above or below median income. Each state has different amounts that will state what the median income is. For Missouri, median income is as follows:
1 Person Household: $40,123 annually
2 Person Household: $52,200 annually
3 Person Household: $60,197 annually
4 Person Household: $69,378 annually
As you can see, the median income increases with larger household sizes. Your household size can be determined by looking at how many people you can claim as dependent; as a general rule you can count anyone who you can claim on your taxes. You can count yourself, your spouse, and your children if they are 18 and under. If you have a child who is over 18, but still dependent (a college student, for example) you can count him or her as well. Additionally if you have a parent or relative who is financially dependent on you living at your home, you can count that person
If you are at or below median income, you will qualify for a chapter 7; however, if you are above median income, you may have to do a Chapter 13 bankruptcy. An experienced St. Louis Bankruptcy attorney will have to do what is called a “Mean’s Test” to see if some of your qualified expenses will actually put you under median, allowing you to file a Chapter 7 bankruptcy.
If you have questions about which type of bankruptcy you will qualify for, contact a St. Louis Bankruptcy attorney today!