Qualifying for Chapter 7: Do Credit Card Payments Count?

Often times when I meet with clients, our first task is to determine what type of relief is available under the bankruptcy laws. A Chapter 7 Bankruptcy filing is a powerful tool for getting a client’s finances, and life, back under control. Usually with this type of case, one’s unsecured debts are cancelled, and they are allowed to keep all of their property.

In determining whether someone qualifies for a Chapter 7 case, the Bankruptcy Code defines their Current Monthly Income generally as the average amount of household monthly income for the six months before filing. If that number is above the median for North Carolina, we need to examine expenses to determine whether a client has a right to relief under Chapter 7.

Credit card payments, and student loans, do not figure into the equation for above-median debtors. Instead, deductions under the means test include payments for groceries, child support, utilities, mortgage, rent, car payments, and support for elderly parents. There are many more expenses which count.

If a person does not qualify for Chapter 7, they usually have options under Chapter 13. Sometimes, a Chapter 13 case works better than a Chapter 7. Even if you don’t know whether bankruptcy is right for you, it makes sense to schedule an appointment with an experienced bankruptcy attorney. Knowing your options can help you plan for a better financial future whether you end up filing a case or not.