Can’t everyone do a Chapter 7 or a Chapter 13?

The simple answer is no. The eligibility for a Chapter 7 is based on several things:

Median Income for Household Size – The median income determines what a Debtor or Debtors can file a bankruptcy. Median income is determined by household size. The following is the median family income data for Missouri and Illinois.


  Household Size


























Don’t panic yet. The means test is a complicated beast. The above amounts are the median income. If your income is higher than above amount for your household size does not mean that you cannot file a Chapter 7. It simply means that we now have to complete the extended means test to determine whether you may still be eligible to file a Chapter 7. There are many expenses that can be calculated to determine eligibility. There are IRS Standard deductions for housing and vehicles expenses depending on whether the vehicle(s) have a debt. Other major expenses in the means test are:

Taxes – Tax obligations that are paid out of your income
Involuntary deduction – Union dues, Mandatory retirement plans and uniforms
Health, disability or term life insurance
Secured debt payments
Court ordered payments
Education for employment or disabled child
Charitable contributions

The eligibility for a Chapter 7 also depends on eligibility for discharge. A Chapter 7 discharge can only be obtained every 8 years. Therefore, even if your income makes your eligible for a Chapter 7, you may not be able to file a Chapter 7.

So then if my income does not allow me to do a Chapter 7 I can do a Chapter 13 right?

Not necessarily. While there is not a income limit on Chapter 13’s, there is a debt limit that the Debtor must not exceed in order to be eligible for a Chapter 13 bankruptcy. In a Chapter 13 there are separate debt limits for both secured and unsecured debts. In order to be an eligible Debtor in a Chapter 13, secured debts must not exceed $1,149,525.00. In order to be an eligible Debtor in a Chapter 7, unsecured debts must not exceed $383,175.00. In debts listed on the schedules exceeds these amounts, the trustee can move for dismissal of the bankruptcy.  Often times these amounts in excess are foreclosed homes or student loans.