Chapter 7 Income Limit in Georgia | Jeffrey Kelly Law Offices

Chapter 7 Income Limit in Georgia

When considering your options to break free from your debt, you may ask, what is the income limit for filing chapter 7 in Georgia? Federal Bankruptcy law requires that you pass a mandatory means test to determine on your income level – that is, your current household income is below the median income for a household of your size in Georgia.

Exemption to the Bankruptcy Means Test

There is a set of conditions in which it’s unnecessary to ask what is the income limit for filing chapter 7. You may not be subject to the bankruptcy means test in Georgia when the following applies:

  • You are a veteran with disabilities or
  • Your sole source of income is Social Security or
  • The majority of your debts are business debt.

But don’t just assume that is true without careful preparation of your bankruptcy by a trained attorney. There could be other circumstances that may not make you except.

What is the Income Limit for Filing Chapter 7?

It is presumed that if your current household income is below the median income for a household of your size in Georgia, then you are eligible for filing a Chapter 7 bankruptcy because you pass the means test.  The following is the guideline that gives you the answer to the question- what is the income limit for filing chapter 7 in Georgia? As of November 2019, the median income in Georgia is the following amounts, based on the number of household members:

  • 1- $49,236.00 
  • 2- $63,850.00 
  • 3- $72,426.00 
  • 4- $85,763.00 
  • 5-$94,763.00 
  • 6-$103,763.00

To determine your annual monthly income for the purpose of the median income test, you first need to check the amount you earned in each of the last six calendar months. Make certain to call The Law Offices of Jeffrey B. Kelly to see if any of these limits have changed.

So what is the average you earned over the last six months? That average amount is used to determine your annual income. Simply multiply by 12 the average monthly income that you had over the past six months. If your income is over the limit in spite of your decline in income, you may simply need to wait for one, two, or three more months, etc. for your six-month average income to qualify you to file for Chapter 7 bankruptcy in Georgia.

People in Your Household & Median Income

There is a bit more to the median income figure suggested above, as relates to members of your household. If you have a roommate in your household who is not a dependent, you cannot include that person in your household size. You are required, however, to include the portion of your roommate’s income that contributes to the overall household income. There are many potential complications to filing for bankruptcy, and this is just one example.

Going at bankruptcy on your own is just plain stupid. Like this and other items, and law changes there are many factors that need to be taken into account during this difficult time.

How a Judge May View Your Ability to Pay

Whatever the amount of your income, other calculations may indicate that you have too much disposable income left over after expenses to qualify for Chapter 7 bankruptcy. All things considered, it’s not always enough to ask what is the income limit for filing Chapter 7 in Georgia? If you want to get a more accurate picture of where you stand in filing for Chapter 7, complete Form B122-A. This isn’t a legal requirement but it will give you a better idea of a trustee’s or judge’s point of view regarding your ability to pay.

A “totality of circumstances” test is part of Chapter 7 bankruptcy law in Georgia. No matter where you fall as far as your income as compared to the median income in the state, you could be barred from Chapter 7 bankruptcy eligibility. While social security income is not considered on the means test, it will be taken into account on your Schedule I of your bankruptcy petition. Judges sometimes rely on different forms as guides in considering the “totality of the circumstances.” Although the income formula excludes Social Security benefits income, Form B 106 Schedule I does not.

Computing Your Disposable Income

If your income does not fall below the average income for your household size in Georgia, it’s possible that you may still qualify for Chapter 7 bankruptcy. Part two of the process is determining what your disposable income is by taking the means test. This part of the process is more complicated, and it’s one of the reasons it’s often highly recommended that you hire a lawyer with bankruptcy experience. Basically, you subtract allowable expenses from your income.  The largest ones I typically see are daycare expenses or child support.

What Must be Counted as Income?

To find your disposable income under bankruptcy laws in Georgia, you begin with your take-home pay. Most sources of income will be included as you calculate income, including rental income, pensions, business income, interest and dividends, money paid toward your household expenses by others, and unemployment income.

Examples of Allowable Expenses in the Georgia Means Test

Once you’ve calculated your income, subtract your allowable expenses. These can include ()but are not limited) to the following:

  • Secured debt payments such as your house and car
  • Tax obligations
  • Involuntary deductions such as mandatory retirement plans, uniforms, and union dues
  • Term life, health, and disability insurance expenses
  • Childcare
  • Out-of-pocket health care costs other than insurance that must be incurred for the health and welfare of you and your dependents
  • Charitable contributions made before the bankruptcy
  • Education expenses for a disabled child or for employment
  • Care of an elderly, disabled, or chronically ill person
  • Expenses incurred for special circumstances, such as excessively high expenses following a natural disaster.  I am extremely hesitant to ever try the special circumstances argument. Chapter 7 trustees take their job seriously and won’t allow anyone to bend the rules.  

How Much Disposable Income is Too Much?

If your income falls within a certain range, you will be prohibited from filing a Chapter 7 bankruptcy and will, instead, need to repay at least some of your debts with a Chapter 13 bankruptcy. If the projected amount of your disposable income over the next five years totals less than $100 per month, you qualify to file a Chapter 7 bankruptcy.

Contact the Law Office of Jeffrey B. Kelly

Once it is determined that you qualify to file for a Chapter 7 bankruptcy, keep in mind that it doesn’t necessarily mean that it’s your best option. For instance, if you are attempting to keep secured property such as a home with a mortgage and you are behind on your payments, Chapter 7 bankruptcy is likely not best for you. Chapter 13 bankruptcy might be a better option in that situation.  It would be in your best interests to interests to consult with an attorney.

Jeffrey B. Kelly, with more than 21 years of experience in consumer bankruptcy, offers skilled legal representation for your Chapter 7 bankruptcy case. We are proud to say that our goal is to treat each person who visits the Law Office of Jeffrey B. Kelly with respect and kindness, and you can count on receiving personal attention. We will answer all of your complex questions, including what is the income limit for filing Chapter 7? Schedule your free evaluation by calling 770-637-1756.