Debtor’s Dilemma

Do You Qualify to File Chapter 7 Bankruptcy?

Not everybody can, do you?

In 2005, the Republican Congress and President Bush passed sweeping new changes in the US. Bankruptcy Laws. Under the old rules, just about anyone who wanted to file Chapter 7 Bankruptcy in New York could do so no matter what their income was.

The new law set income caps on those who qualify. The debtor’s income must be at or below the mean income. The US Bureau of Labor Statistics issues annual schedules of mean income by region, city, and family size.

The mean income for an individual, living alone in New York City is approximately $46,000, whereas the mean income for a family of four (4) living in Long Island is approximately $82,000.

If your income is above the mean income, you could still pass the “Means Test”, and could qualify under Chapter 7 bankruptcy.

The “Means Test” is a 12-page form. You list both your monthly income and “necessary and deductible” monthly expenses over a six (6) months period. If your “qualifying” overall “expenses” exceed the mean “expenses”, then you could and will “pass” the Means Test with an elevated income.

Not all “expenses” are acceptable in the means test calculation. For example, you may not include income support payments for an elderly parent, not living in your household, or non-court order child support, or expenses that are deemed non- essential or luxury items.

However, “high” rent or mortgage payments, student loan payments, child education expense and any medical expenses for members of the household are acceptable.

An experienced bankruptcy lawyer or paralegal will know how to include all acceptable “expense” to ensure that a debtor who “legally” qualifies under the new rules will pass the “Means Test”, even if that individual has a “high” income. Do not be discouraged, you may qualify for Chapter 7 Bankruptcy in New York even with your present income. After all, most people who are considering bankruptcy have expenses that exceed their income.

For any assistance in this regard, please contact Jeffrey Weinstein Bankruptcy Attorney, on 212-693-3737