When you find yourself struggling to pay your bills, bankruptcy may be the best option. Bankruptcy allows you to discharge your debts. In some cases, you can get rid of your unsecured debts, like credit card debt and medical debt. Other times, you have to enter into a special repayment plan for several years before you receive your discharge.
Chapter 7 bankruptcy involves liquidation of assets and discharge of debts, while Chapter 13 involves repayment plans. However, if you have a good job, you may worry that you make too much money to qualify for Chapter 7 bankruptcy. It is true that there is a limit to your overall income if you hope to file for chapter 7 bankruptcy.
That limit is based on the median household income for your family size in the state. By looking at your annual income based on your current rate of pay, you can determine if you qualify for Chapter 7 bankruptcy protections and liquidation discharge, or if you will instead need to file Chapter 13 bankruptcy with a repayment plan.
Your income and the size of your family affect your ability to qualify
The more children or dependents you have, the higher your income can be if you need bankruptcy protections. If your income only supports yourself, your adjusted income must be $45,045 or less. If you are married or have one child, for a household size of two people, the income limit increases to $54,047.
For a family with three people, the income cap increases to $64,002. Families of four can qualify with an annual income of $78,489. It’s easy to see when looking at those figures how a bigger family size makes it easier to qualify for Chapter 7 protections.
If your income is within $10,000 of the limit, you should talk with the lawyer
You might think, from looking at your tax paperwork, that your income is clearly over the limit for Chapter 7 bankruptcy in Louisiana. However, that income is your adjusted income, and there are certain allowances that may be made for expenses in your life.
In other words, if you are relatively close to the maximum amount without making adjustments to your income, you might want to sit down and talk with an experienced Louisiana attorney. They can give you a better idea about whether Chapter 7 bankruptcy or Chapter 13 will be in your best interest.
Additionally, they can advise you about some of the risks of Chapter 7 bankruptcy, such as the requirement to liquidate assets if you own substantial property. Getting good advice can help you make the most of your bankruptcy filing while protecting your income and your assets from seizure by the courts.