Chapter 7 bankruptcy offers a fresh financial start, but understanding income eligibility is a crucial step. You might be asking: What is the maximum income for Chapter 7 in Georgia?

In Georgia, there is no specific maximum income for Chapter 7 bankruptcy. Eligibility is determined by the Means Test, which compares your income to the state median for your household size. If your income falls below the median, you may qualify for Chapter 7.

With decades of experience guiding individuals through Georgia’s bankruptcy process, I’ve helped many determine their eligibility under the Means Test. Let’s explore how the Means Test works and what it means for your Chapter 7 bankruptcy case.

 

 

What Is Chapter 7 Bankruptcy?

Chapter 7, often called “liquidation bankruptcy,” allows you to discharge many unsecured debts, such as credit card balances and medical bills. However, not all debts are included—student loans, child support, and certain tax obligations usually cannot be discharged.

When you file, the court assigns a trustee to oversee your case. The trustee reviews your financial situation and may sell any nonexempt assets to pay creditors. Understanding which assets are exempt under Georgia law is critical before filing.

 

How Does Chapter 7 Bankruptcy Work in Georgia?

When you file for Chapter 7 bankruptcy, the court places a temporary stay on the debts you currently have. During this stay, your creditors can’t collect payments or take other forms of relief against you, such as eviction, foreclosure, or repossession. The court takes legal possession of your property and appoints a bankruptcy trustee.

It’s the trustee’s job to review your finances and assets and oversee your bankruptcy case. Any nonexempt property gets sold, and the proceeds are used to pay your creditors. The trustee also sets a creditor meeting for you to answer questions regarding your Chapter 7 filing.

Each state has its own rules about which property is exempt from bankruptcy proceedings. Most Chapter 7 cases are considered no-asset cases so that any nonexempt property will have a valid lien against it. Whatever debts you have left after the Chapter 7 process will be discharged, meaning you no longer have to pay them. However, you should know that some debts, like student loans, child support, and alimony, cannot be discharged through bankruptcy.

 

What Are the Income Requirements for Chapter 7 Bankruptcy in GA?

If you want to file a Chapter 7 bankruptcy claim in Georgia, you must meet income requirements as part of the qualification process. You might be asking: What are the income requirements for Chapter 7 bankruptcy in Georgia? 

In Georgia, you must pass the means test to qualify for Chapter 7 bankruptcy. If your total disposable income over 60 months is less than $7,475, you qualify. If it exceeds $12,475, you don’t qualify for Chapter 7 but may explore Chapter 13 as an alternative. To qualify for a Chapter 7 filing, your income must be below a specific amount. Further, you must prove that you meet this requirement with two “means tests.”

For the first means test, you compare your income to that of the median household income in Georgia for households similar to yours. How is the median income decided? US Census data is used to determine the average household income. In 2020, for example, the census showed that a three-person household had an average income of $75,460. So, if your income was less than that and you had three people living in your household, you would qualify to file Chapter 7.

Income limits used for the means test experience regular adjustment. As of April 1, 2022, the median income used for the means test in Georgia had increased to $79,980 for a three-person household. That’s an increase of about $4,000 over the 2020 numbers.

What does that mean? Simply put, if you have a three-person household in Georgia and make less than $79,980 annually, you could move forward with a Chapter 7 bankruptcy filing.

 

How Does the Means Test Work in Georgia?

The Means Test determines if you are eligible for Chapter 7 bankruptcy. It evaluates your financial situation by comparing your income to the Georgia median income for households of the same size.

Step 1: Comparing Your Income to Georgia’s Median

The first part of the test checks if your income is below the median for your household size. As of [date], the income limits are:

Household Size	Annual Income
1	$55,600
2	$71,504
3	$79,980
4	$96,622

For households larger than four, add $9,000 per additional member. These figures are updated periodically, so check for the latest data when preparing to file.

Step 2: Calculating Disposable Income

If your income exceeds the median, the second part of the test examines your disposable income. This is your income after subtracting allowed expenses, such as rent, utilities, and childcare. If your disposable income is very low, you may still qualify for Chapter 7.

 

What Income Is Considered with the Means Test?

It’s important to note that not all income is included in the means test calculations. Some disability and social security income isn’t included. Neither are payments of victims of war crimes nor payments related to a national emergency.

The definition of the income that is included says, “any amount paid by any entity other than the debtor, on a regular basis for household expenses of the debtor.” To better understand the broad nature of the definition, let’s look at specific types of income that are included.

• Income from salaries
• Spouse’s income (if not legally separated)
• Hourly income
• Overtime income
• 1099 income (Uber, Lyft, etc.)
• Net rental Income
• Georgia government income
• Child support
• Alimony
• Dividends, interest, and royalties
• Pension income
• Retirement income
• Net business income
• Annuity payments
• Unemployment compensation
• Worker’s compensation

Ensure you calculate your income correctly by reviewing the past six months before filing, as required under 11 U.S.C. § 101(10A).

 

Important Notes About the Means Test

The United States Trustees Office says the means test is a standardized form you must complete to file bankruptcy. When you complete the form, you will calculate your average monthly income. Then the figure will be annualized to determine your average annual income.

Here is some other important information regarding the means test.

1. Even if your spouse isn’t filing bankruptcy with you, your entire household income is used for the means test. A possible exception is if you are legally separated.
2. Using US Census Bureau data, your average household income will be compared to other household incomes in Georgia.
3. You must include the average monthly income from all sources for the six months before filing the bankruptcy case. 11 U.S.C. § 101(10A). So, if you are filing on September 12, the six-month period you must include is the time from March 1 through August 31. You would add all income for those months and divide your total by six. Only use income from any source once. For example, if you and your spouse are listed as owners of a rental property, only add the rental income in one column rather than attribute it to both people. If there is any line on the form that doesn’t apply to your situation, put $0 in that place on the form.
4. If you have income that varies each month, consider using an average income calculator to calculate your average monthly income.

 

What Happens If Your Income Is More Than Georgia’s Median Income?

If your income is more than the median income, you may still be able to file for Chapter 7 bankruptcy relief. There is a second means test that will determine if you qualify even if your income is higher than the current median. That test calculates your disposable income.

Disposable income isn’t difficult to calculate. To make the calculations, you need to know what your monthly expenses are. First, total your monthly expenses. Subtract that total from your monthly income, and you will have your monthly disposable income. If you have very little disposable income each month, you may still qualify to file for bankruptcy under Chapter 7.

 

 

What Property Can You Keep Under Georgia’s Exemptions?

Georgia law allows you to protect certain assets during bankruptcy. Common exemptions include:

• Up to $21,500 of equity in your primary residence (homestead exemption)
• $5,000 for a vehicle
• $1,500 for tools of the trade
• $5,000 for household goods

Each exemption category has limits, so it’s important to work with an attorney to maximize your protections.

 

Other Requirements for Chapter 7 Bankruptcy

Even if you pass the Means Test, you must meet additional qualifications, such as:

• No prior Chapter 7 bankruptcy filing within the past 8 years
• No recent Chapter 13 filing (within 6 years)
• Completion of an approved credit counseling course within 180 days of filing

If the court finds that you are attempting to hide assets or commit fraud, your case can be dismissed.

 

What Happens If You Don’t Qualify for Chapter 7?

If you fail the Means Test, you may still pursue Chapter 13 bankruptcy. This type of bankruptcy allows you to create a repayment plan for your debts over three to five years.

Other alternatives include:

• Debt Settlement: Negotiating with creditors to lower the amount owed
• Debt Management Plans: Working with a credit counselor to create a repayment plan
• Payoff Planning: Organizing your debts by priority and tackling them systematically

 

Key Considerations Before Filing

• Residency Rules: You must have lived in Georgia for at least two years to use the state’s exemptions.
• Impact on Credit: Filing for bankruptcy will lower your credit score, but many filers report improvement within a year of discharge.
• Reaffirmation Agreements: You may keep certain secured debts, like a car loan, by agreeing to continue payments.

 

Take Control of Your Financial Future Today 

Filing for Chapter 7 bankruptcy in Georgia can offer relief from overwhelming debt, but it’s important to meet all eligibility requirements. By passing the Means Test and understanding Georgia’s specific rules, you can move forward with confidence.

If you are unsure if Chapter 7 bankruptcy is right for you, an experienced bankruptcy attorney can help you. At Morgan & Morgan, the attorneys are available to help you determine whether you meet the qualifications for Chapter 7 bankruptcy or whether you should choose a different option. Call 706-548-7070 to schedule your free no obligation consultation today!

 

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