How Does My Income Affect My Eligibility For Bankruptcy?
Understanding how income affects a bankruptcy case can be complicated. Depending upon the type of bankruptcy you are considering or researching, you might learn that too much income can prevent you from being eligible to file for consumer bankruptcy. For other types of bankruptcy, you might learn that a regular income is necessary to be eligible to file for bankruptcy. Our West Palm Beach bankruptcy lawyers can explain how income can affect your eligibility for bankruptcy, and when a high income can hurt your eligibility for bankruptcy and when a regular income can be necessary.
Too Much Income Can Affect Your Eligibility for Chapter 7 Bankruptcy
In order to be eligible for Chapter 7 bankruptcy, you will need to show that your income and assets are limited enough for a liquidation bankruptcy not to be abusive. Most consumers will need to pass the “means test,” which is a way of proving that your income and assets are low enough to qualify. If you earn a regular income that allows you to repay some debts, you are unlikely to be eligible for Chapter 7 bankruptcy.
Regular Income is Required for Chapter 13 Eligibility
Unlike Chapter 7 bankruptcy, eligibility for Chapter 13 bankruptcy requires you to have a regular income to qualify. Chapter 13 bankruptcy, for this reason, is known as a “wage earner’s” plan.
There is no set income required in order to be eligible for Chapter 13 bankruptcy. Rather, it will be important to determine whether your individual income is sufficient to allow you to make the payments outlined under your repayment plan. Accordingly, the income that is sufficient for one Chapter 13 debtor may not be sufficient for another Chapter 13 debtor. If you have any questions about your eligibility for Chapter 13 bankruptcy or what type of income will likely be required in order for you to show the court that you will be able to fulfill the repayment plan terms, you should seek advice from a West Palm Beach bankruptcy lawyer.
Reorganization Plans Require Regular Income
Depending upon your circumstances, you may be ineligible for Chapter 13 bankruptcy due to the amount of debt you owe, and you may need to file for Chapter 11 bankruptcy. Or you may be a small business owner that is considering Chapter 11 bankruptcy or Chapter 12 bankruptcy, which are both types of reorganization bankruptcy. For a reorganization bankruptcy, it is necessary to have a regular income or regular earnings in order to be able to meet the terms of any debt reorganization or repayment plan.
Contact a Bankruptcy Attorney in West Palm Beach
If you have any questions about how your income will impact your eligibility for bankruptcy, including how income can limit your eligibility under Chapter 7 and how it can be essential for a Chapter 13 case, you should get in touch with a lawyer. One of the experienced West Palm Beach bankruptcy attorneys at Kelley Kaplan & Eller can learn more about your circumstances today and can provide you with more information about bankruptcy eligibility in Florida.