Goals & Qualifying 2017-09-06T15:45:50+00:00


There are certain factors that are involved in qualifying for a specific Bankruptcy Chapter. After qualifications are determined, the next step will be lining up the Chapter for which you qualify with your specific goals.

For instance, if you qualify for a Chapter 7 income-wise but you are months behind on your mortgage and facing foreclosure, then you may want a different solution than a Chapter 7. If you want to bring the loan current (get caught up on payments), avoid the foreclosure and keep your home, then a Chapter 13 may be the better option even if you do qualify for the Chapter 7.

As a further example, let’s say you definitely qualify for a Chapter 7 income-wise, but you own a large amount of free & clear land it in another state that you wish to keep. In this situation a Chapter 7 may not a good option for you.


The following is written mostly in legalese for those who are really interested in knowing the technical parts—don’t worry this is what would be handled by your experienced attorney at RS Law, L.L.C.

Section 707(b) of the Code allows the Bankruptcy Court to dismiss a Chapter 7 case filed by a debtor whose debts are primarily consumer debts if it finds that the granting of relief would be “an abuse of the provisions of this chapter.” It then goes on to create presumption of abuse where the consumer debtor’s Current Monthly Income (CMI) minus allowed expenses exceeds the state median income for the debtor’s household size.

In order to complete Form B22 (the Means Test) accurately, the following documents and information should be present: sufficient pay stubs and other evidences of income to determine Current Monthly Income (“CMI”); Schedules A-J and Statement of Intention accurately completed; documentation of special circumstances that evidence justification for taking expenses that exceed the IRS standard deduction.

Section 101(10A) defines “current monthly income” (CMI). CMI includes the debtor’s total income from all sources (except social security benefits), for the six months ending in the month prior to the month of the bankruptcy filing. CMI also includes any amount paid by any other entity toward the debtor’s household expenses on a regular basis.

Code Section 101(39A) defines Median Family Income (MFI) as the median family income calculated and reported by the Bureau of the Census in the most recent year, or as most recently adjusted. The Census Bureau publishes figures for each state, for families of household sizes from one to five. The Debtors’ state of residence and household size is compared to state median income for that household size. Where the numbers land after that will determine whether or not you are “above median income” or “below median income”. This point is a fork in the road that your attorney will help you navigate with all your options, and their respective pros and cons.