Qualifying For Bankruptcy In Ohio
As long as you haven’t filed a Chapter 7 bankruptcy in the previous eight years or a Chapter 13 within four years, you may be eligible to file Chapter 7 Bankruptcy. The two tests which determine if you qualify for Chapter 7 bankruptcy are the income expense test and a means test.
The income expense test compares your monthly net income to your monthly reasonable and necessary expenses. Usually these expenses are pretty straightforward. For instance, a normal family of four in Columbus Ohio making $70,000 per year will spend a similar amount on clothing as another family of four with similar income. If you subtract your expenses from your income, and have little or no income left to pay your creditors, then you will pass the income expense test.
The means test is a formula designed by Congress which bases whether or not you qualify for bankruptcy on the county you live in, family size, income and monthly expenses. Based on the average of your six-month prior income, the formula determines whether you are an above-median income debtor or below-median income debtor. A family of four in Franklin County, Ohio, is determined to have a median income of $76,381. If your gross monthly income for the previous six months is below this number, you have passed the means test. If you are above this number, you still may be eligible depending on your monthly expenses. The formula takes into account expenses such as car payments and mortgage payments to determine if you have disposable income to pay your creditors. In the event you still do not pass, you may still be eligible for a Chapter 13 bankruptcy.
If you pass both of these tests you may qualify for Chapter 7 bankruptcy protection. Depending on the amount of debt you have, and your previous financial history Chapter 7 may be a great opportunity to allow you to get a fresh start.
To qualify for a Chapter 13 bankruptcy, you must not have unsecured debt in excess of $360,475 or secured debt in excess of $1,081,400. If you are under these two debt limits you will most likely qualify for a Chapter 13 bankruptcy. The income expense test and means test determine how much you have to pay and for what length of time. While other factors may determine eligibility, such as not having enough disposable income, these two tests are the primary factor that will automatically disqualify you from filing.