Does Chapter 7 Bankruptcy go by gross income or net income? - Bankruptcy Law Questions and Answers- LawQA.com

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Does Chapter 7 Bankruptcy go by gross income or net income?

We can't find the answer listed anywhere and really need an answer so we can figure out what to do.

Answer By Susan G. Taylor
Law Office of Susan G. Taylor
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Most lawyers offer a free consultation you ought to get one. The Means Test number is gross. If over that amount, you must take the Means Test. But on it you will get credit for most paystub/business expense deductions, including taxes and insurance.

Answer Applies to: Texas
Replied: 1/23/2014


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The means test is based on gross income.

Answer Applies to: Nevada
Replied: 1/21/2014


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A person's ability to pass the "means test" and qualify to file a Chapter 7 case is based on both their gross income and their net income. If you have questions regarding whether you pass or fail the means test, then it would be advisable to meet with a bankruptcy attorney so that they could properly analyze your options. Most bankruptcy attorneys offer free consultations.

Answer Applies to: North Carolina
Replied: 1/20/2014

Stuart P Gelberg
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Your Q is unintelligible. Are you referring to the Means Test? Gross income.

Answer Applies to: New York
Replied: 1/17/2014


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The first consideration for the means test is annual income based on the last six months gross income. However, there are other factors that are considered in determining whether you are eligible for a Chapter 7 or Chapter 13a qualified bankruptcy attorney can help you with this.

Answer Applies to: Arkansas
Replied: 1/17/2014

Answer By DAVID A. KUBAT
LAW OFFICE OF DAVID A. KUBAT
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The Means Test used to determine (at least partly) your eligibility for a Chapter 7 bankruptcy compares your total average gross income for the 6 months prior to filing a bankruptcy with the median gross income for Washington State (depending on the number of people in your household).

Answer Applies to: Washington
Replied: 1/17/2014

Answer By Daniel Garner
Garner Law Office
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The "means test" looks at gross income for the past 6 months; at this time, that would be the period from July to December 2013. If you have business income, that is allowed to be stated in net terms, after reasonable and necessary business expenses are subtracted. All other income into your household, whether taxable or not, must be included (such as SNAP food stamps and WIC) other than social security benefits. If the annualized amount of that income for that period exceeds the median for your size household in your geographic area, then you have to do the "long form" means test which makes allowances for typical household expenses and calculates a disposable monthly income based on household surveys. If that result falls below a certain number, then you can qualify for a Chapter 7 even if your gross income exceeds the median. On the Oregon Bankruptcy Court's website, there are links to all the information you need.

Answer Applies to: Oregon
Replied: 1/17/2014

Answer By Marc S. Stern
Marc S. Stern
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It doesn't "go by" either. If your adjusted gross income is above the median, there are a series of deductions to determine whether your filing is presumed abusive. These calculations have nothing to do with reality and trying to understand them is a waste of time. They are what Congress mandated.

Answer Applies to: Washington
Replied: 1/17/2014

Answer By Jeffrey Solomon
Law Office of Jeffrey Solomon
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The question of whether bankruptcy looks at gross or net income is that it looks at both. The starting point is gross income. Gross income for the 6 months prior to filing bankruptcy is the starting point for preparing the "means test". We then compare that average to the median income of the state. The bankruptcy schedules require showing a budget, which would show gross income and payroll deductions.

Answer Applies to: Florida
Replied: 1/17/2014


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I assume you are referring to eligibility under the Means Test. It starts with your gross income and compares it to the median income for your household size and the state you live in. If your average monthly gross income for the previous six months is below median, you are eligible to file Chapter 7. If your income is above median, then you may still be eligible, but you must satisfy the Means Test to determine whether a "Presumption of Abuse" arises. If your expenses allowed under the Means Test exceed your income, then you are eligible. Even if these expenses are less than your income, you may still be eligible in some circumstances. It can be complicated. You should contact an experienced bankruptcy attorney if you are considering any type of bankruptcy relief.

Answer Applies to: California
Replied: 1/17/2014

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