SCHREIBER LAW OFFICE, LLC
Do I make too much money to file for Chapter 7
bankruptcy?
The primary factor to determine chapter 7
eligibility is your income compared to the state's
median income (the "means test."). If you make
below the median income listed below, you "pass"
the means test, and are much more likely to be
eligible for a chapter 7 bankruptcy. If you make
above the median income, you still may be able to
qualify for chapter 7, depending on what your
expenses are. The current income numbers for
Minnesota residents are:
(Updated April 1, 2023)
HOUSEHOLD SIZE
HOUSEHOLD ANNUAL INCOME
1.
$71,643
2.
$90,946
3.
$114,267
4*
$141,324
*For each additional household member, add $9,900
Do I make too much money to file for Chapter 13
bankruptcy?
No. There are no income guidelines for chapter 13
eligibility.
Will I lose any of my assets if I file for bankruptcy?
The Bankruptcy Code allows individuals to keep
enough of their property to be able to obtain a
fresh start after their case is filed. In most cases,
this means individuals are able to keep all their
property. For example, if you own a house,
Minnesota law allows you to keep up to $450,000
in equity for a homestead.
Will I have to pay tax on the debts that were
discharged in bankruptcy?
That is a great question, and the answer is NO!
Unlike other types of debt forgiveness, debts
discharged in bankruptcy are excluded from gross
income for tax purposes. This is federal law, no
matter what state you live in. See 11 U.S.C.
108(a)(1)(A) (discahrge of debts in a title 11 case).
Also, the current version of Form 1099-C states on
the reverse side that debts cancelled in
bankruptcy are not included in your income.
What if I filed for bankruptcy before, can I file now
and discharge my debts?
You can file another bankruptcy, but to get a
discharge you need to make sure enough time has
passed since the previous one. These rules apply
only if you received a discharge of debts in the
previous bankruptcy. If your previous bankruptcy
did not end in a discharge, you probably don’t
need to wait:
-If you are considering filing a chapter 7 now
and have a prior chapter 7, you have to wait 8
years from when the previous chapter 7 was
filed.
-If you are considering filing a chapter 7 now
and have a prior chapter 13, you generally
have to wait 6 years from when the previous
chapter 13 was filed, but there are a few
exceptions where you can file sooner.
-If you are considering filing a chapter 13 now
and have a prior chapter 7, you have to wait 4
years from when the previous chapter 7 was
filed.
-If you are considering filing a chapter 13 now
and have a prior chapter 13, you have to wait 2
years from when the previous chapter 13 was
filed.
If a creditor has a judgment, can I still discharge
that debt in bankruptcy?
Yes (unless the judgment is for child support,
spousal maintenance, taxes or a student loan). A
judgment creditor’s debt is discharged along with
your other debt. This office also handles the
removal of the judgment from your record.
Is there a credit counseling requirement in order
to file for Bankruptcy?
Yes, If you decide to file bankruptcy, the law
requires that a credit counseling briefing must be
done either in person, online or over the phone.
There are some exceptions to this requirement,
but the exception is limited to narrow
circumstances. The credit counseling briefing
must be administered by an agency approved by
the Bankruptcy Court. It generally takes about an
hour and costs about $20-25 depending on the
credit counseling agency selected. If you are
considering bankruptcy, it is best to meet with an
attorney before doing the credit counseling to
make sure bankruptcy is your best option before
spending the time and money on the credit
counseling.