High income? You may still qualify for Chapter 7…
Many people do research about bankruptcy prior to seeking out the services of a lawyer. They get on their computer and search for bankruptcy topics such as dischargeable debts, chapter 7 vs. chapter 13, or asset exemptions. Another area that is frequently researched, but is often misunderstood is the Means Test.
The Means Test was developed as part of the bankruptcy overhaul of 2005, and was included in the bankruptcy process to limit those individuals who could technically pay back their debts over time from simply getting the immediate benefit of a chapter 7 discharge. Essentially, the Means Test determines the monthly amount of income an individual can earn each month (as calculated over a 6 month average) and still qualify for a chapter 7 discharge. That monthly average is then expanded into a yearly average. The income limits are based on tables and vary state to state. The Washington Means Test table can be found here.
But even if an individual has a yearly gross income that exceeds the tables provided by the US Department of Justice, that only creates a “presumption of abuse.” Meaning, there could be abuse in the filing, but an abuse that can be rebutted. Some individuals may technically not qualify based on the Means Test income tables, but due to their current, and forward looking, situation, could defeat the presumption of abuse and remain in chapter 7.
This is yet another reason why it helps to consult with a professional when it comes to bankruptcy. Don’t write off the possibility of a simple chapter 7 discharge just because you might make too much money.