How Child Support Or Spousal Maintenance (Alimony) Can Affect Your Ability To File Chapter 7 Bankruptcy
Before you file for bankruptcy, your bankruptcy attorney will request income information for the last six months. In order to qualify for Chapter 7 bankruptcy, your income for your household size must be below the median income level for Colorado (or whatever state in which you intend to file).
Currently, there are only two sources of income that don’t have to be included in the means test: Social Security income and veterans’ disability benefits. Veteran retirement benefits still have to be included.
Any child support or alimony you receive will be included as income for purposes of the means test in both Chapter 7 and Chapter 13. If this income takes you over the median income to qualify for Chapter 7, there is probably little you can do to qualify for a Chapter 7. We will do our best to qualify our clients for Chapter 7, but most times it just isn’t possible. At that point, they have two options: file a Chapter 13 bankruptcy to reorganize the debts; or try to pay their debts outside of bankruptcy.
Although most people who have researched bankruptcy will come to their consultation stating a desire to file Chapter 7, once they learn more about Chapter 13, the realize the benefits it holds compared to not filing and continuing to deal with their debt the same way they have been.
Can I Deduct Child Support Or Alimony Payments I Make From My Income?
The flip side of including support payments you receive is that if you pay support, you can deduct the payments from your income. Over the years, any clients I’ve had who have been over the median income who have qualified for Chapter 7 anyway have, more often than not, owed child support or spousal maintenance.
Talk To An Experienced Denver, Colorado Bankruptcy Attorney
The means test is one of the more complicated aspects of bankruptcy, and you should consider talking to an experienced Denver, Colorado bankruptcy attorney about whether or not you qualify for Chapter 7 bankruptcy. You can schedule a free consultation by clicking here.
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