WHERE YOU LIVE CAN IMPACT THE TYPE OF BANKRUPTCY YOU CAN FILE

Where you live can impact the type of bankruptcy you can file. That is because several years ago, Congress determined that in deciding whether a debtor can wipe out their debt entirely or must pay some of the debt back, there should be more focus on a debtor’s income. So the law was revised to add an income test, sometimes referred to as the “means” test. Under this law, the debtors household income is compared to the average  income in that jurisdiction. For example, if you and your spouse live in Philadelphia, Pennsylvania and  your annual salary combined  is more than $74,805.00, there is a presumption that you should file a chapter 13 and pay something back to your unsecured creditors. However, even if your income is more than the stated amount, if you can show you have enough expenses so that you do not have excess income, you can still file a chapter 7. Now, lets say the same couple lived across the Delaware River in Cherry Hill New Jersey. In their case, they could make up to $92,669.00 before there would be a presumption that they should file a Chapter 13 because in NJ that is the average income for a family of two. So if the couple is making $80,000.00 per year, it would be more difficult for them to file a Chapter 7 in Pennsylvania then it would be in Cherry Hill NJ. Again, if they have enough expenses they could still file a Chapter 7 in PA. It just becomes a little more difficult. If you want to know more about how bankruptcy works, you should contact an experienced bankruptcy attorney.