Medical bills, credit card balances and other debts can strain an Oregon household. Chapter 7 bankruptcy may help, but your income and finances affect whether you qualify.
Oregon Chapter 7 cases use the federal means test. This test compares your income to the median income for a household of the same size. It also looks at allowable expenses to see how much money you have left each month.
How your income is measured
The means test evaluates income from the six full calendar months prior to filing, annualizes it, and compares it to Oregon’s median for your household size.
If your income is above the median, you may still qualify. You may need a second means test that subtracts certain expenses and debt payments. If too much disposable income remains, Chapter 7 may not be available.
Some income does not count the same way as other income. For example, qualifying Social Security benefits are excluded under the federal rules. Because the numbers change, check the current U.S. Trustee means-testing information before filing.
What if you are above the limit?
Being above the median does not automatically disqualify you. It only means you may need a closer review of your income, expenses and debt.
If the means test shows too much disposable income, the bankruptcy court may presume Chapter 7 is not the right fit. In some cases, that presumption can be challenged.
Chapter 13 may be an option
If Chapter 7 is not available, Chapter 13 may be worth considering. It lets eligible debtors with regular income repay debt through a court-approved plan, usually over three to five years.
Chapter 13 has its own rules, including debt limits and other eligibility requirements. Whether it works better depends on your income, assets and goals.
Get the current numbers before you file
Income limits are only one part of the Chapter 7 analysis. Household size, expenses, debt type and recent changes in income can all affect the result.
Before filing, review your numbers using the current means-test figures. A bankruptcy attorney could help you see whether Chapter 7 or Chapter 13 makes more sense for your situation.
