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The Six-Month Gross Income Test

You qualify for Chapter 7 bankruptcy if your average gross household income, based on the six months before the month in which you file, is below the median household income for your state. Add another $6,900 for each additional person.

To see whether or not you qualify under this income test, add up all your gross income for your household for the six calendar months immediately preceding the current month. Then multiply the total by two and compare it to the chart.

EXAMPLE: Preston and Megan live in Kansas with their three children. In September they examine their gross income from all sources (which includes bonuses, commissions, overtime, and even lottery winnings) for the months March through August. Their total income for that period is $36,600. They multiply that figure by two to arrive at an annual figure of $73,200.

 

They turn to the appendix and see that Kansas has a median annual household income of $69,831 for a family of four. They add the additional allowance of $6,900 for the fifth member of their household to arrive at a figure of $76,731. That is less than the Kansas median annual household income, which means they pass the income test and can file for Chapter 7 bankruptcy.

Median household income data. You an can get the current numbers for households in your state at: www.usdoj.gov/ust/eo/bapcpa/20080317/bci_data/median_income_table.htm.

If you wait, you may qualify later. If your income is higher than the median income for your state, based on your gross income for the previous six months, but your income has recently gone down, you might consider waiting for another month or two to file. The delay may render your income for the new six-month period low enough to produce an average below your state’s median.