We'll review the requirements for Chapter 7 bankruptcy in North Carolina in this post, along with some calculators to help you determine if you qualify. We will also outline the benefits and drawbacks of each strategy and offer alternatives to bankruptcy. These are a few initial things to keep in mind:
- If your current household income is less than the median income for your family in North Carolina, you may be eligible for Chapter 7 bankruptcy
- If you have deductible expenses, you might still be eligible even if your household's income is higher than the median income. In this case, our bankruptcy means test calculator can assist you in determining your eligibility.
The North Carolina bankruptcy means test calculator is available below. With the most recent data for 2023–2024, it will provide you with an estimate of your eligibility.
North Carolina Bankruptcy Means Test Calculator
As mentioned earlier, this calculator will assist in determining how qualified you are. It will also give you an estimate of the cost of filing for bankruptcy in North Carolina with legal assistance. To begin, you can click "Start Here" below:
Chapter 7 Means Test Explanation
We'll review the history of the calculator above and how the means test is applied to bankruptcy. Essentially, it is an income test that calculates your average annual income by multiplying your monthly income by twelve. Then, to determine whether you are eligible for Chapter 7 bankruptcy, this yearly income is compared to the North Carolina median income. Here are a few more specifics:
- Even if your spouse isn't filing with you, the means test considers your household's total income (unless you are legally separated).
- The average monthly income from all sources during the six months before filing for bankruptcy will be the information you provide. The average annual income will be calculated by dividing all six months' income by six.
- The same income should not be mentioned more than once. Put the income from the rental property in one column, for instance, if you and your spouse jointly own it.
North Carolina Chapter 7 Bankruptcy Income Limit
These are North Carolina state's median income limits for different household sizes. Your household income must be less than the amounts below to be eligible for Chapter 7 bankruptcy. The data is arranged by household size and the corresponding median income.
| # of People | Annual Income |
|---|
| 1 | $61,811 |
| 2 | $78,415 |
| 3 | $89,965 |
| 4 | $109,590 |
| 5 | $119,490 |
| 6 | $129,390 |
| 7 | $139,290 |
| 8 | $149,190 |
| 9 | $159,090 |
For households with more than 9 individuals, you may be able to add $9,900 for each additional family member
What Is Considered Income?
We've already covered the various income thresholds, and the bankruptcy means test. We will now detail what "counts" as income and possible exclusions. All income categories that the previously mentioned bankruptcy will consider means test are listed below.
- Salaried income: The amount you get paid each month.
- Spousal income: Your spouse's income is subject to challenge if you're in a joint case or aren't officially separated.
- Hourly and overtime pay: You can deduct any overtime you work.
- Net Rental Income: Any money you make from renting out real estate is included.
- North Carolina government income: Your state payments are included on this list if you get any.
- Alimony and child support
- Royalties, Interest, and Dividends: funds from investments and entrepreneurial ventures
- Retirement and Pension Income
- Net business income: The money you make from your firm is included if you are the owner and operator.
- Payments for annuities
- Compensation for unemployment
- Benefits from Worker's Compensation
What Is Considered In Household Size?
How to determine the size of a household is another frequently asked question. Household size as it relates to bankruptcy is any number of people living in the same residence who are financially connected. This covers immediate family members, dependents, and others who use or contribute to the household's resources. T
North Carolina Above Median Bankruptcy Means Test
You may still be eligible even if you used the bankruptcy means test calculator and could not meet the requirements or if our summary above showed that your household income is higher than the median. You will need to use alternative test forms in this situation. The initial document is referred to as the "Statement of Exemption from Presumption of Abuse Under §707(b)(2)." It facilitates ascertaining whether you are free from the assumption of abuse. This form is called the "Chapter 7 Means Test Calculation." With this one, you can calculate your disposable income by subtracting your allowable monthly expenses from your current monthly income (CMI). A combination of national and North Carolina-related expenses are taken into account.
Furthermore, you may still be eligible for Chapter 7 bankruptcy if your disposable income exceeds a specific threshold. That said, you can take the calculator below to estimate qualification for the first part of the North Carolina Chapter 7 Means Test.
Allowable deductible expenses
While we're talking about deductible costs, we should also discuss some possible examples of them. The actual expenses that you can deduct on the second part of the bankruptcy mean test include things like income taxes, health, and disability insurance premiums, child care costs, term life insurance premiums, required employment deductions (think union dues, retirement plans, and uniforms), secured debt payments for your home and vehicle, alimony and child support payments, and charitable contributions.
In addition, you may deduct additional costs in certain situations. The total number of people living in your home determines the amounts that can be spent on these expenses. You can look up the current national standards to see the maximum amounts. These costs include cleaning supplies, clothes, food, personal care items and services, housing and utility costs, transportation, and direct medical costs.
What Happens If You Fail the Bankruptcy Means Test?
If you fail the bankruptcy means test, you might also want to think about other options to help manage your debt. Filing for Chapter 13 bankruptcy is one option. With this kind of bankruptcy, you can design a three- to five-year repayment schedule to settle your debts.
You might also be able to take back control of your finances with additional options like debt management, debt settlement, or debt payoff planning. For each option, we've provided a brief synopsis below.
Chapter 13 Bankruptcy
In North Carolina, a Chapter 13 bankruptcy is referred to as a wage earner's plan. A payment plan will often be used to repay a portion of your unsecured debt. The good news is that you can typically keep your assets as long as you stay within the debt limits. There is no income qualification, and it will only appear on your credit report for seven years instead of the customary ten. Although the payment plan's duration can vary, it usually lasts between 36 and 60 months.
Some individuals prefer Chapter 13 over Chapter 7 bankruptcy if they have more equity than what's allowed under the Ohio bankruptcy exemption; Chapter 13 might be the way to go.
Debt Settlement
Debt settlement is negotiating a lower debt amount with your creditors, either on your own or through a company. Typically, a 12- to 60-month payment plan is included with these programs. But it's crucial to remember that not every debt settlement business is the same. When you enroll in their program, some may charge you more than 25% of your outstanding debt.
Check out the Consumer Finance Protection Bureau if you'd like to learn more about the nuances of debt settlement programs. They have all of the most recent information you require.
Debt Management
Debt management, sometimes called credit counseling, is how a business works with your creditors to reduce the interest rate on your debt. These businesses might be unable to assist with unsecured personal loans because they typically concentrate on working with credit cards. Once you're enrolled, you pay the debt management business regularly, and they handle the distribution of funds to your creditors. The average duration of this payment plan is 36 to 60 months.
This option may lower your interest rate by approximately 10% to 20% if you have a large amount of high-interest credit card debt. By doing this, you'll be able to pay off your bills more quickly and save anywhere from 30 to 50 percent of what you currently owe. Ultimately, it's critical to consider your specific circumstances and choose the most sensible financial option.
Summary
Understanding North Carolina's Chapter 7 bankruptcy means tests and income limits may seem challenging, but it can be a helpful first step toward getting financial relief. Notwithstanding its complexity, Chapter 7 is frequently chosen because it is less expensive than other debt-relief options. The means test accounts for various exclusions and compares your household's income to the North Carolina income limit.
Keep trying even if your income exceeds the cutoff. Your expenses and deductions are also considered when determining your eligibility for Chapter 7 bankruptcy. Take great care to think through these sections of the means test so you don't unintentionally guess you are not eligible. Additionally, our calculator can help you get a more precise idea of whether or not you might be qualified.
There are additional choices to think about, such as Chapter 13 bankruptcy, debt settlement, or debt management. There is always a way forward because each option offers different considerations and potential solutions, regardless of the means test results.
