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Ohio Bankruptcy Explained
Bankruptcy Pre-Filing Credit Counseling Session
Ohio Median Income
If your average monthly income for the past six months is below the state median for your size household, you meet the requirements of the “means test” (section 707(b)(2) of the bankruptcy code) to qualify for Chapter 7 Bankruptcy.
Persons in Household |
Monthly |
Annual |
1 |
$3,538 |
$42,458 |
2 |
$4,410 |
$52,922 |
3 |
$5,188 |
$62,251 |
4 |
$6,186 |
$74,234 |
5 |
$6,761 |
$81,134 |
6 |
$7,336 |
$88,034 |
7 |
$7,911 |
$94,934 |
8 |
$8,486 |
$101,834 |
9 |
$9,061 |
$108,734 |
Source: U.s. Trustee, U.S. Department of Justice (for cases filed on or after February 1, 2008)
Note: The means test is but one of several hoops you must jump through. Even if your income is low, a judge can prevent you from filing Chapter 7 if it appears that you have enough income to repay a substantial portion of your debts in a 3-year Chapter 13 plan.
Bankruptcy Law requires all individual persons who file any kind of bankruptcy to take a brief credit counseling course within six months before filing for bankruptcy. You must also complete a financial management instructional course after you file for bankruptcy too, before your bankruptcy discharge can occur.
What Kind of Bankruptcy Should I File?
That depends on what you want to accomplish as well as your income and expenses and bills and what kind of bankruptcy you may qualify for.
In a Chapter 7 bankruptcy, sometimes called a “liquidation” bankruptcy, most of your debts are wiped out and you get to keep different kinds of property up to certain maximum values and you turn over the rest of your property to the bankruptcy court trustee, who sells all non-exempt property and gives the money to your creditors.
In a Chapter 13 bankruptcy, sometimes called a “wage earner’s plan” or “payment plan bankruptcy.”. In a Chapter 13 bankruptcy, you still get to keep most of your property but you have to use your income to pay some or all of what you owe to creditors, in payments that are made over time, usually three to five years.
Bankruptcy “Means Test”
To determine what kind of bankruptcy you qualify for, your income and expenses will be analyzed. Consumers normally qualify to file a Chapter 7 bankruptcy or a Chapter 13 bankruptcy, depending on whether or not they can afford to pay their bills off over time. This is called a “means test.” To apply the means test, the courts will look at the your average income for the 6 months before the bankruptcy filing and compare it to the median income for Ohio (see the chart). If your income is below the median income level, then you may file a Chapter 7 bankruptcy. If your income is more than the median income level, then the remaining parts of the means test will be applied to determine if you can file Chapter 7 or if you must file a Chapter 13 repayment plan.
Your will probably still be able to file a Chapter 7 bankruptcy if you are unable to pay at least $6,000 over the next five years ($100 per month) to your unsecured creditors after your own expenses. However, if you can afford to pay at least $10,000 over five years ($166.67 per month or more) your Chapter 7 will probably be denied by the court and you will have to consider filing a Chapter 13 repayment plan.
If you can afford to pay more than $6,000 but less than $10,000 over five years, then a mathematical calculation determines whether your Chapter 7 will likely be successful or not. If you could afford to pay 25% or more of your unsecured debt, then a Chapter 7 will likely be denied. If you can't afford to pay 25% of your unsecured debt, your Chapter 7 filing will likely be successful. Examples of unsecured debts would include medical and credit card bills. Note that you can still opt for Chapter 13 even if you qualify to file under Chapter 7.
As you can see, the bankruptcy process and the court legal system can seem confusing. We can help you understand it. Call us today at 1.888.331.6422 or 937.432.9500. Or email us now by clicking here: info@DaytonBankruptcyHelp.com