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Question: I am wanting to file ch 7, We hired attorney April 2010. We had a loss of income which made it hard to pay bills. I was told we couldn't file until our car and house payment were caught up. it took a year but we are now caught up however we made$93,000 last year $55,000 after deductions. I claim 6 people on my taxes,my husband, myself, my daughter 21 a student, son 19 student, daughter 17 student and granddaughter 2. my mother in law lives with us, she is on SSI but doesn't pay us anything. do I make to much to file ch 7? I did the means test but it seems in accurate my house punt is $1314 and the car allowance is way off as well as groceries. my attorney wont give me a straight answe.
Response: Even if you made $93,000.00 last year, the income that would be used to determine if you qualify to file for Chapter 7 would be income that you have made this year, specifically, income you have made from January 1, 2011 to June 30, 2011 if you want to file this month. The income that is used in Means Test calculation is 6 months income before the month of the filing of the bankruptcy case. You should also count your mother-in-law. Her SSI will not be used in the Means Test Calculation. However, the fact that she is receiving SSI must be shown on the Schedule 1. Also, see Schedule J for household expenses:
You may be eligible to file for chapter 7 bankruptcy protection, if you meet the means test--the income test. If your income is equal to or less than the current income guidelines for your household size in your state, you would be eligible to file for a Chapter 7 bankruptcy all things being equal.
These are the current income guidelines for the State of Texas:
Household of one person $38,294.00
Household of two persons $55,178.00
Household of three persons $56,445.00
Household of four persons $65,477.00
Add $7,500.00 for additional individual
Means Test Form:
The decision that you made to delay the filing until you are caught up with your car and house payments is the correct one. If you are filing for Chapter 7 and are behind on your car and house payments, once you file for the bankruptcy protection, your lender would immediately file a Motion for Relief from the Automatic Stay to repossess the vehicle and to foreclose on the property. Chapter 7 unlike Chapter 13 is a liquidation chapter. It is not for reorganization of your debts. So, if you file for Chapter 7 and are delinquent on your obligations, your creditors are not going to give you chance to come up with a payment plan, your creditors would immediately take action to get their property back and to recoup their investment.