Your ability to file for Chapter 7 bankruptcy and wipe out your debts is determined by your household’s Current Monthly Income, which is the sum of the following:
- Your average gross (before taxes are taken out) income over the past six months
- PLUS your spouse’s gross income (unless you’re separated)
- PLUS any contributions to your household expenses by other persons
Current Monthly Income does not include any of the following income:
- Social Security benefits
- Crime and Terrorism Victims Compensation
Any portion of your spouse’s gross income that is not contributed to household expenses is not counted towards the amount of money you have available to repay your debts. Therefore, your spouse’s income is counted for information purposes only and will not impact your ability to file for Chapter 7 bankruptcy.
If your Current Monthly Income is less than the state median family income for a household of your size then you automatically qualify for Chapter 7 bankruptcy. If your monthly household Bankruptcy Income is greater than the state median family income for a household of your size then you may or may not be eligible for Chapter 7.
MEDIAN FAMILY INCOME BY FAMILY SIZE
(in 2005 inflation-adjusted dollars)
Family Size Washington Oregon
1-person families $43,891 $37,530
2-person families $54,044 $48,676
3-person families $59,732 $54,633
4-person families $73,259 $61,209
If your Current Monthly Income is greater than the state median family income for a household of your size the courts look to your allowable expenses (these may or may not be the actual amounts you spend on your basic living expenses). If your Current Monthly Income minus your allowable expenses leaves with enough money to repay a certain portion of your debts over time then you may be eligible to file for Chapter 13 bankruptcy.