• Can I File For Chapter 7 Bankruptcy?
  • May 30, 2012
  • Law Firm: Law Offices of Rami N. Nabi - Tustin Office
  • Although there is no debt limit required for Chapter 7 bankruptcy there are certain requirements an individual or married couple has to meet in order to be eligible for Chapter 7¬†Bankruptcy.


    Current Monthly Income or CMI is how much money you make every month. This amount does not include Social Security benefits and few other exceptions. Furthermore, this amount is computed by looking at the previous 6 months prior to the month that you filed for bankruptcy.

    Median Family Income is the average income a family of your size receives in your state under the IRS guidelines.


    After determining your current monthly income, you now compare that number to the median family income for your state. As of 2011 in California the Median Family income for a household of one is $49,188.00 a year. If your Current Monthly Income is less then the Median Family Income then there is no presumption of abuse and you do not have to go through the means test in order to qualify for Chapter 7 bankruptcy.If your CMI is greater the the Median Family Income for your state you now have to qualify under the means test.


    Under the Means Test the bankruptcy court allows you the opportunity to still qualify for Chapter 7 bankruptcy. In order to do this you have to take your Current Monthly Income and deduct all allowed expenses provided by the IRS cost of living standards. Then deduct expenses for secured debts such as a mortgage or car loan. After taking all of these allowable deductions and your disposable income is above $182.50 per month a presumption would arise and your case would likely be dismissed.

    If you do not pass the means test Chapter 13 bankruptcy is still a possibility.