Malcolm Rivera
The eligibility requirements for filing for bankruptcy under Chapter 7 in Ohio are based on a means test that takes into account the income and expenses of a household. This means test compares an individual's current income with the median income in Ohio for a household of a similar size. If an individual's income is below the median, they are eligible to file for bankruptcy under Chapter 7. If their income is above the median, they may still be eligible if they pass the means test, which considers their income minus their expenses. Household expenses include healthcare, housing, food, personal care, and transportation costs. The number of people in a household can vary depending on specific circumstances, such as children away at college or individuals who are engaged but not yet married.
| Characteristics | Values |
|---|---|
| Who can be counted in a household | This may depend on bankruptcy jurisdictions in Ohio. It usually goes by the saying "heads on beds", and an attorney may look at who is filed within your taxes. |
| Income | Income includes salary or gross wages from a job, spousal or child support, business income, rental income, interest and dividends, pensions and retirement plans, unemployment income, and amounts paid by others for your household expenses. |
| Expenses | Expenses include necessities such as healthcare, housing, food, personal care, and transportation costs. Other expenses may include mandatory employment expenses like union dues, retirement plans, and uniforms. |
| Median income | The median income varies depending on household size. For 2017-2018, the median income for a household of 1 earner was $47,582, for 2 people it was $59,565, for 3 people it was $69,058, and for 4 people it was $83,515. For each individual in excess of four, add $8,400. |
| Means test | The means test calculation determines whether an individual can pay back a portion of their unsecured debts through a Chapter 13 bankruptcy. If your income is below the median income for your household size, you pass the means test and may file a Chapter 7 bankruptcy. |
| Chapter 7 bankruptcy | Chapter 7 bankruptcy involves the liquidation and sale of a debtor's nonexempt property, with the proceeds distributed to creditors. It remains on a credit report for 10 years. |
| Chapter 13 bankruptcy | Chapter 13 bankruptcy is a wage earner's plan that allows individuals to pay back unsecured debts through a structured repayment plan lasting 3 to 5 years. It remains on a credit report for 7 years. |
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What You'll Learn
Median income and household size
The median household income in Ohio in 2023 was $73,770. This figure is an increase from the previous year, which saw a median household income of $67,520. The average income for households in Ohio is $94,766, and the median income is $69,680. The median salary for full-time workers in Ohio is $57,763, and the median income for single-person households is $36,730. The average family income for Ohio is $115,826, and the median family income is $90,288.
In Ohio, if an individual wishes to file for bankruptcy under Chapter 7, they must pass the Ohio means test. This test compares an individual's current income with the median income level in Ohio. If an individual's income is below the median, they will be eligible to file for bankruptcy under Chapter 7. If their income is above the median, they may have to file for bankruptcy under Chapter 13. The means test calculation helps determine if an individual can pay back their unsecured debts through a Chapter 13 bankruptcy plan.
The income limit for filing Chapter 7 bankruptcy in Ohio changes every six months. Individuals must be at or below the income threshold depending on their household size. For households with more than nine members, $11,100 can be added for each additional member.
The definition of a household in Ohio for Chapter 7 purposes can vary. It usually goes by the saying "heads on beds", and an attorney may also look at who is filed within your taxes.
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Disposable income
To determine eligibility for Chapter 7 bankruptcy in Ohio, individuals must undertake a means test. This test compares an individual's current income with the median income in Ohio, taking household size into account. If an individual's income is below the median, they will be eligible to file for bankruptcy under Chapter 7. If their income is above the median, they may have to file for bankruptcy under Chapter 13.
If an individual's disposable income is below a certain amount, they may still qualify for Chapter 7 bankruptcy. For example, if an individual's disposable income is less than $128 per month, they qualify for Chapter 7 under the means test. If it is more than $214 per month, they do not. If an individual's disposable income falls between these amounts, further calculations are required. They must take their monthly disposable income and multiply it by 60 to determine the total amount they could pay to creditors through a Chapter 13 plan.
In some cases, individuals with disposable income exceeding $214 per month may still be able to demonstrate their need for Chapter 7 bankruptcy. For instance, if they have important family or health matters to consider. Additionally, if an individual's debts are not consumer debts, they are exempt from the means test. Similarly, disabled veterans who incurred their debt during active duty or while performing a homeland defence activity are also exempt.
It is important to note that the income limits for Chapter 7 bankruptcy in Ohio change every six months. Therefore, individuals should use the Chapter 7 calculator to determine the most up-to-date income thresholds for their household size.
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Household expenses
In Ohio, the Chapter 7 means test compares an individual's income with the state's median income for a household of the same size. Household expenses play a role in this evaluation, as they can be deducted from income to determine eligibility. These deductions include mandatory employment costs like union dues, retirement plans, and uniforms, as well as other expenses such as housekeeping supplies, clothing, food, personal care, housing, utilities, transportation, and healthcare. The maximum amounts for these deductions are based on national standards and vary based on household size.
It's important to note that Ohio's income thresholds for Chapter 7 eligibility change every six months, and the specific rules about who qualifies as a member of your household may vary across different bankruptcy jurisdictions within the state. Therefore, it's advisable to consult Ohio's means testing webpage and seek legal counsel from a bankruptcy attorney to navigate the intricacies of household expenses and their impact on Chapter 7 qualification.
While Chapter 7 bankruptcy can provide a path to debt relief, it's not the only option. Chapter 13 bankruptcy, also known as a wage earner's plan, offers individuals a way to repay unsecured debts through a structured payment plan while potentially retaining their assets. The choice between Chapter 7 and Chapter 13 depends on individual circumstances, and consulting with a legal professional can help determine the most suitable course of action.
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Income sources
To be eligible to file for bankruptcy under Chapter 7 in Ohio, your income must be below the median for your household size. This is determined by the Means Test, which compares your current income with the median income level in Ohio. If your income is higher than the median, you may need to file for bankruptcy under Chapter 13, which involves a structured repayment plan.
The Means Test takes into account your income from almost all sources, including salary or gross wages, spousal or child support, business income, rental income, investments, unemployment income, retirement income, and pensions. It also considers amounts paid by others for your household expenses.
If your income fluctuates, you can take the average monthly gross income for your household over the last six months and divide it by 12 to get your average monthly income. This figure is then compared to the income threshold for your state and household size. For households with more than nine members, you can add $11,100 for each additional member.
Allowable expenses, such as household expenses and mandatory employment expenses, can be deducted from your income. These expenses include housing, food, healthcare, transportation, and retirement plans. After deducting these expenses, your disposable income is calculated, which is the amount of money left to pay your unsecured creditors.
It is important to note that the eligibility criteria for Chapter 7 bankruptcy in Ohio can be complex, and it is recommended to consult with an experienced bankruptcy attorney for personalized guidance.
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Eligibility
To be eligible to file for bankruptcy under Chapter 7 in Ohio, your income must be below the median income for a household of your size in the state. The threshold for income limits changes every six months, so it is important to check the most up-to-date data. The Census Bureau updates the median income for states annually.
The Chapter 7 means test is used to determine eligibility for bankruptcy. If you fail the means test, you can only file for Chapter 13, which involves a structured repayment plan lasting 3 to 5 years. The test checks for potential abuse of the system, ensuring debtors aren’t filing for Chapter 7 when they could repay some debts. It primarily evaluates the debtor’s ability to pay creditors.
The means test calculation compares your current income with the median income level in Ohio to make sure you are below it. If your income is higher than the median, you will need to complete the means test calculation to determine if you can pay back a portion of your unsecured debts through a Chapter 13 bankruptcy. If your income is less than the median income for a household of your size, you automatically qualify for Chapter 7 bankruptcy.
The calculation involves taking your total income for the past six months, including salary or gross wages from a job, spousal or child support, earnings from an owned business, investments, and both unemployment and retirement income, among other possible sources. The resulting six-month total is then divided by six to find a rough monthly income amount, which is then multiplied by 12 to find an annual gross income. This sum is then compared with the state limit.
If you have children away at college or are engaged but not yet married, determining household size can be tricky. Different bankruptcy jurisdictions in Ohio might have rules about who can be counted in your household size. Generally, it usually goes by the saying “heads on beds,” and sometimes the attorney may look at who is filed within your taxes, so be sure to seek counsel.
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Frequently asked questions
The Chapter 7 Means Test is a series of calculations that determine eligibility for Chapter 7 bankruptcy. It compares your income with the median income in Ohio for a household of your size.
Your income includes salary, gross wages, spousal or child support, business earnings, investments, and unemployment and retirement income. The total income over the past six months is calculated, divided by six, and then multiplied by 12 to find your annual gross income.
Generally, it is determined by the number of people in your household. However, if you have children away at college or are engaged but not yet married, this may vary depending on the bankruptcy jurisdiction in Ohio.
If your income is above the median, you may still qualify for Chapter 7 if you pass the Means Test. This test evaluates your ability to pay creditors and checks for potential abuse of the system.
If you fail the Chapter 7 Means Test, you may still be able to file for bankruptcy under Chapter 13, which allows for a repayment plan over 3 to 5 years.
