When determining if you can qualify for a Chapter 7 bankruptcy, we first need to consider your gross household monthly income, your expenses, and the number of people in your household. For example, if you have a roommate and you are going to count the roommate’s expenses (such as electric bill, total rent, etc.), then you must include the roommate’s income also. If instead, however, you only count your half of the expenses that you pay (half of the electric bill, half of the rent, etc., then you do not need to include the roommate’s expenses. When counting the number of people in your household, everyone counts – kids, too. People who rely on you for their care, such as children under 18 or the elderly, are also sometimes called “dependents”.
The next step in determining if you can qualify for a Chapter 7 bankruptcy is to compare your gross income against the national median income. These numbers change quarterly and are dependent upon the number of people in your household. Take your gross monthly income from the first step and multiply it by twelve (months) to get your gross current annual income. The United States Department of Justice Office of the United States Trustee determines median income. As of November 1, 2018, the median income for Florida is:
- 1 person household – $46,677
- 2 person household – $57,968
- 3 person household – $62,912
- 4 person household – $74,512
You can find current median income information for other states here: https://www.justice.gov/ust/means-testing/20180501
What the median income means is that if you are over the median income, you most likely will be required to file a Chapter 13. If you are under the median income, you can file a Chapter 7.
However, in some cases, you may still be able to file a Chapter 7 case. A more in-depth look at your finances, income, and expenses would be needed to fully calculate whether you could file a Chapter 7. The calculation is referred to as the Means Test. The means test allows you to deduct certain expenses in order to reduce your monthly income. If you have enough expenses, your reduced monthly income (multiplied by 12 months) will then determine if you are over or under the median income. If you are under the median income, you will qualify and can file a Chapter 7.