Can You File Chapter 7 if You Make Too Much Money?

If you’ve been reading this blog for a while, then you know there is a means test for Chapter 7 bankruptcy. Yet, there’s still a way to file Chapter 7 if you make too much money. A variety of circumstances make it possible for high earners tofile chapter 7. 

  1. Your state has a high median income. If you make the median or below, you qualify for Chapter 7.
  2. You are supporting multiple dependents. Your dependents must meet the legal qualifications for dependency, and no, you can’t claim weird Uncle Albert who hits you for a twenty a week for gas money.
  3. You are a veteran or an active member of the armed forces, including the National Guard or reserves.
  4. Current payments on your secured debts (mortgage, car note, equipment for your work or business) are high when compared to your current income, impeding your ability to meet your other obligations such as student loans, child support, or bills. Those secured debts also need to compromise a significant amount of your debt, as opposed to your unsecured debt.
  5. Your debts are for your job or business and includes business credit cards, loans, tax debts, back rent, equipment purchases or leases, office expenses, and other approved debts.
  6. Your debts prevent you from paying priority debts such as child or spousal support.

So, the answer to ‘Can you file for Chapter 7 if I make too much money‘ is ‘maybe.’ It’s important to take this blog as a guide to preparing to file for bankruptcy, and understand that filing Chapter 7 is not a one-size fits all solution to debt problems.

But I Thought Chapter 7 was the ‘Easy’ One?

Nothing about bankruptcy court is easy, that’s why a bankruptcy attorney exists even to file Chapter 7. Yes, filing your Chapter 7 case automatically stays all collection actions, and you get a bit of breathing room. However, the bankruptcy trustee is very exacting, and if you do not file Chapter 7 correctly your bankruptcy petition will be denied. You’ll have to start all over again. You could use a bankruptcy preparer, but because they do not have legal standing with the Florida Bar, they can’t offer legal advice. The most they are allowed to do is fill out forms with the information that you provide.

When it comes to questions like ‘Can you file for Chapter 7 if you make too much money,’ you really need to sit down with an attorney that specializes and get an opinion. That opinion is backed by countless hours of doing the actual work of working a bankruptcy case from filing to discharge. 

Understanding Chapter 7

Chapter 7 is the so-called ‘liquidation bankruptcy’ where your assets that are not protected under bankruptcy law are sold off to pay your creditors. Protected assets can be your truck and work equipment, your retirement accounts, or even your home under specific circumstances. Other protected asset classes include-

  • Head of household wages
  • Disability or unemployment income, worker’s compensation, veteran’s benefits and Social Security
  • Annuities and life insurance disbursals or cash value
  • Retirement accounts, college savings accounts, and medical savings accounts
  • $4000 in personal property if you do not own a home, $1000 if you do
  • $1000 worth of value in a motor vehicle
  • Interest in a multi-partner LLC with a valid operating agreement
  • Estate planning trusts
  • Prescribed health aids for the filer or their dependents

So even that simple bankruptcy requires a lot of footwork. It’s not something you want to have to file and refile. 

What If I Can’t Afford It, Even If I Do Make Money?

Could you afford to file if all your collection actions were stayed? Could you afford payments on a $0 down bankruptcy if all those bills and debts eating your check stopped as soon as you filed? If you could, then coming in for a free consultation is going to be the first step to getting into a debt free life. If you are making enough to handle your life without debts, then you should file. Waiting too long is only going to keep frittering your money away on minimum payments while neglecting things you need to make a priority. 

  • Could you afford your whole prescription medications if you weren’t in so much debt?
  • Could you get needed dental care if you weren’t spending so much money servicing your debt?
  • How long have you gone without new glasses or an eye exam because the debts come first?
  • Have you skipped vet care for your pet or had to choose a less effective option because of cost?
  • Is your car having problems that you can’t afford?
  • Are your spouse or kids going without care because there’s no money to spare?
  • Are you going further into debt with personal loans, payday loans or financing companies like Care Credit?
  • Have you taken out a title loan against your car to pay for goods and services you or a family member needs?

If you have done or even considered any of these, it’s time to talk to one of Van Horn Law Group’s skilled attorneys. Everyone has a rough patch once in a while, but the points above indicate more than a temporary tight spot. These issues indicate a long-term problem and however you got there, you need help getting out. If you’re at this point, you’re not digging yourself deeper, but are instead in a whirlpool of debt. 

Call Us at Van Horn Law Group

Since 2009, Chad Van Horn has helmed Van Horn Law Group and assisted many south Floridians with getting out from under their debts. Our offices in Fort Lauderdale, West Palm Beach, and Miami are waiting for you to book a free initial consultation with a bankruptcy attorney. Debt is more than just not having money, it’s being locked out from goods and services that you need to live and thrive. Call us today and set up that appointment. We’re here to help! 

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Can You File Chapter 7 if You Make Too Much Money?
There's still a way to file Chapter 7 if you make too much money. A variety of circumstances make it possible for high earners to file chapter 7.
Chad Van Horn
Van Horn Law Group
Van Horn Law Group
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Chad Van Horn

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