Colorado Bankruptcy Means Test and Income Limit 2024

Chapter 7 Means Test Explanation

The means test is like an income test that you have to complete if you want to file for bankruptcy. It's a standardized form that the United States Trustees office uses to see if you qualify. The form calculates your average monthly income, then annualizes it to figure out your average annual income.

Now, there are a few important things you have to keep in mind about this means test. In Tennessee, they look at your whole household income, even if your spouse isn't filing with you. However, if you're legally separated, it might be a different story.

When it comes to the means test in Tennessee, they compare your average household income to other households in the state. They use data from the Census Bureau to do so.

To figure out how they calculate your average monthly income for the means test, you have to fill in the average monthly income you received from all sources during the 6 full months before you file for bankruptcy. So, if you're filing on September 15, you'd look at the period from March 1 to August 31. If your monthly income varied during those 6 months, you have to add up all the income and divide it by 6 to get the average. If you and your spouse both own the same rental property, just include the income from that property once. And if you don't have anything to report on a line, just write $0.

If your income is fluctuating, you may want to check out the average income calculator. It's specifically built for the Tennessee means test, and it'll give you an estimate of your average monthly income.

Now let's talk about the bankruptcy means test calculation in Tennessee for cases filed in 2024.

Tennessee Chapter 7 Bankruptcy Income Limit

Now, before we get started, please keep in mind that these figures change every six months or so. So, if you're reading this after November 1, 2024, the numbers may be different. If you're wondering how much you can make and still qualify for bankruptcy in Tennessee, take a look at the table below to see the annual income thresholds based on the number of people in your household. If you have more than nine in your household, just add $9,900 for each additional family member.

Just remember, these figures are subject to change, so it's always a good idea to stay updated.

What Is Considered Income?

When looking at what is considered income in the means test, it is important to know not all income is included in this test. Some disability and social security income get a free pass. Colorado also exempts payments for victims of war crimes and those related to national emergencies, like COVID-19.

Now, let's break down the types of income that are included in the Colorado bankruptcy means test:

• Salaried income,
• Spousal income (yep, even in joint cases or if you're not legally separated).
• Hourly and overtime income
• 1099 income (think Uber or Lyft).
• Net rental income,
• Colorado government income,
• Child support, and alimony
• Dividends, interest, and royalties
• Pension and retirement income.
• Net business income,
• Annuity payments,
• Unemployment compensation, and worker's compensation benefits.

Now, let's shift gears and talk about how household size is calculated.

What Is Considered In Household Size?

Another question that often comes up is how household size is determined. Now, you might think that your roommate would be included in your household size, but that's not necessarily the case. However, if you have children that you claim as dependents on your taxes, they would typically be considered part of your household.

Now, things can get a little tricky if you have children who are away at college or if you're engaged but not yet married. Different bankruptcy jurisdictions in Colorado may have different rules on who can be counted as part of your household. Make sure to mention these circumstances to your attorney.

Colorado Above Median Bankruptcy Means Test Calculator

So it may be looking like your income is above the household income level for Colorado. But don't worry, there's still a chance you might qualify for some help. There are two means test forms that you can try out: the Statement of Exemption from Presumption of Abuse Under §707(b)(2) and the Chapter 7 Means Test Calculation. These forms allow you to deduct your allowable monthly expenses from your current monthly income to figure out your disposable income. The expenses they take into account are a mix of national and Tennessee expenses.

Now, let me explain what disposable income is. It's the money you have left after paying your expenses, and it's what you can use to pay off your debts. If your disposable income falls below a certain amount, you might still be eligible for Chapter 7 bankruptcy.

The Colorado above-median bankruptcy means test calculator below uses both forms we talked about to help you figure out your allowable expenses and estimate whether you qualify for Chapter 7.  

Allowable deductible expenses

Let's discuss the expenses you can deduct when taking the bankruptcy means test. There are certain costs that you can claim as actual expenses. Check them out:

• First, we have mandatory employment deductions like union dues, retirement plans, and uniforms. These are expenses you can subtract from your income.
• Next, health and disability insurance premiums.
• Income taxes.
• If you have childcare expenses, you can deduct those too.
• Term life insurance premiums.
• Secured debt payments for your car and home, you can deduct those too.
• Alimony and child support payments.
• Charitable contributions. You can deduct them too, but there's a limit based on a percentage of your income.

Now, there are also other expenses you can deduct for special circumstances. These expenses have limits based on the number of people in your household. If you want to know the maximum amounts allowed for these expenses, you can refer to the current national standards.

• Housekeeping supplies
• Clothing
• Food
• Personal care services and products
• Housing and utility expenses
• Transportation expenses
• Out-of-pocket healthcare expenses are some of the expenses you can deduct.

Just remember, there are limits based on your household size.

If you have any other questions, it's always a good idea to reach out to a local bankruptcy attorney in Colorado. They can provide you with a free evaluation and help you navigate through the process.

What Happens If You Fail the Bankruptcy Means Test?

If you do not pass the means test, there are still some options on the table for you.

One option to consider is filing for Chapter 13 bankruptcy in Colorado. This particular type of bankruptcy allows you to create a repayment plan to settle your debts over a period of time.

Alternatively, you can explore some bankruptcy alternatives like debt settlement, debt management, or debt payoff planning. These alternatives offer different approaches to help you get a handle on your financial situation.

Chapter 13 Bankruptcy

A Chapter 13 bankruptcy in Colorado is like a wage earner's plan. Instead of wiping out all your debts like in a Chapter 7 bankruptcy, you'll create a payment plan to repay a portion of your unsecured debts. The good news is that you can usually keep your assets, and there's no need to qualify as long as you stay within the debt limits. Plus, it only stays on your credit report for 7 years, instead of the usual 10 years. The duration of the payment plan can be either 36 or 60 months, but if you're in a 100% Chapter 13, your plan might be shorter.

You may choose Chapter 13 bankruptcy over Chapter 7 if it comes down to equity. If you have more equity than what's allowed under the Colorado bankruptcy exemption, Chapter 13 might be the way to go. It gives you the chance to hold onto your valuable assets while still finding a way to repay your debts.

Debt Settlement

Debt settlement is when you or a company negotiate with your creditors to lower the amount of debt you owe. They cut you some slack and forgive a portion of what you were supposed to pay back. For instance, if you're sitting on $50,000 debt, a debt settlement can try to negotiate with the creditors and bring it down to a more manageable $25,000.

Now, debt settlement usually comes in the form of a payment plan that lasts anywhere from 12 to 60 months. It gives you some flexibility to gradually chip away at your debt without feeling completely overwhelmed.

But here's the thing: not all debt settlement companies are the same. You have to be careful about who you choose to work with. Some of these companies can charge you more than 25% of your enrolled debt, which can add up over time.

That's why it's important to do your homework. You can check out the Consumer Finance Protection Bureau for the latest info on debt settlement programs. Or, if you want to make things easy, you can always reach out to us for more information.

Many debt settlement firms are national, so you don't necessarily have to find one nearby if you're in Colorado.

Debt Management

Debt management, also known as credit counseling, is where a company will negotiate on your behalf to lower the interest rate on your debt. Imagine owing a 22% interest rate, but with the help of a debt management company, that rate could drop down to a more manageable 9%. Now, here's the deal: many debt management companies are non-profits, they'll gladly work their magic with your credit cards, but keep in mind that they may not be able to help with unsecured personal loans. The payment plan typically lasts between 36 and 60 months. During this time, you'll make regular payments that fit your budget, helping you chip away at your debt little by little. Many debt management firms are national, so you don't have to limit your search to just Colorado.

Summary

Understanding the bankruptcy means test and income limit in Colorado for Chapter 7 bankruptcy qualification can be quite a challenge. But hey, don't fret! Many folks prefer Chapter 7 bankruptcy because it's often cheaper than other options when it comes to getting relief from debt. Who doesn't like saving some cash, right?

So, let's break down the basics of how the Chapter 7 bankruptcy means test and income limit work in Colorado. Here's the lowdown:

1. First things first, it all depends on how your household income stacks up against the Colorado income limit. Now, certain incomes count, and others don't.
2. Even if your household makes more than the income limit, you might still qualify for Chapter 7 bankruptcy in Colorado based on your expenses and deductions.
3. Now, if you happen to fail the bankruptcy means test, don't lose heart. There are still other options on the table, like Chapter 13 bankruptcy, debt settlement, and debt management.

If you're curious about whether you qualify for Chapter 7, go ahead and give the Colorado bankruptcy means test calculator below a try. It'll give you an estimate of your eligibility.