First you have to determine whether you're eligible.
Eligibility depends on how much your monthly income is. The law uses a "means test" to identify debtors who can pay some money to their creditors. If your income is above a set amount in the "means test" you will have to file a 5-year Chapter 13 plan to pay creditors back instead of filing a Chapter 7.
For New York, for cases filed after March 15, 2009, the median income for a single wage earner is $46,523; for a family of two, it is $57,006; for three, $67,991; and for four, $83,036. Add $6,900 for each individual in excess of 4.
If your income is lower than this, then the "means test" won't affect you and you can file a Chapter 7 bankruptcy. If your income is over the median then your will have to qualify under the "means test" to get a Chapter 7.
Also, you can only file Chapter 7 once every eight years.
If your income is over the median income in Illinois, then the "means test" will apply to your bankruptcy. The "means test" looks at 3 things:
(1) Current monthly income, measuring the total income a debtor has available;
(2) A list of allowed deductions from current monthly income; and
(3) "Trigger points," which are the income levels that tell you that the debtor will not be able to file a Chapter 7 bankruptcy.
According to the "means test," you take your current monthly income and subtract the deductions that are allowed. If the amount left over qualifies as a trigger point, then you can not file for Chapter 7 bankruptcy.
You will not be able to file a Chapter 7 bankruptcy if either of these apply to you:
- If you have at least $166.67 in current monthly income after the allowed deductions; or
- If you have at least $100 in current monthly income after the allowed deductions and the income is enough to pay at least 25% of your general unsecured debt over five years.
If the amount left over qualifies as a trigger point, then your Chapter 7 bankruptcy case will either be dismissed or changed to a Chapter 13 bankruptcy case. In a Chapter 13 bankruptcy, the debtor tries to repay his creditors rather than wipe out his claims with no payment.
You should speak to a bankruptcy attorney in your area if you do plan to file.