Understanding The Ohio Bankruptcy Income Limit

Understanding The Ohio Bankruptcy Income Limit

Ever since the 2005 bankruptcy law changed, anyone looking to file bankruptcy under chapter 7 needs to know what the 'means test' is and that they must pass it. This test compares your current income with the median Ohio income level to make sure you are below it. If you are below the median, you will be eligible to file for bankruptcy under chapter 7. If your current income is above the median, then you may have to file for bankruptcy under chapter 13.

Chapter 7

The law in Ohio states that you will be eligible to file for bankruptcy under chapter 7 if your current annual earnings fall below the median earnings of a household that is similar in size to yours. To put this into perspective, for a sole earner in a household in Ohio as of May 1, 2020, the median income is $51,297. If there are two earning members in the household then the median income is $64,665, for three earning members it is $77,642, and finally for four earning members the median is $93,239. Each additional earner in your household beyond 4 people adds $8,400 to that total. If your annual income is below your respective household category median, then you need to discuss with your lawyer what to do about filing for bankruptcy. If you are over the median income, you may still qualify for a chapter 7 if you pass the means test. Hausen Law will run the means test to determine if you pass it. Contact us for a free consultation if you think this option is for you.

Chapter 13

In Ohio, when you decide to file for bankruptcy under chapter 7, there are certain limits with regard to how much you can earn. While the law states that you need to earn below the median income to be eligible to file for bankruptcy under chapter 7, it does not necessarily mean that you cannot file for bankruptcy at all. If you earn above the median income, you will be eligible to file for bankruptcy under chapter 13 or a 'repayment' bankruptcy. This kind of bankruptcy filing is better for people that have a lot of property that they would like to retain. It is also beneficial for people that have sufficient equity.

Seeking Advice About Bankruptcy in Ohio

The median incomes set by your respective state will need to be referenced before you file for bankruptcy. You should also check for the median incomes corresponding to the earning members in your household. Contact our Northeast Ohio Bankruptcy Attorneys before you move ahead with the filing of your bankruptcy to improve your chances of succeeding and  ensure that all paperwork is in place along with your petition.

During tough financial situations, filing for bankruptcy might be your last resort. This helps you protect whatever little assets you have and prevents you from getting sued by the people you owe money to. This gives you a little time to build back your finances and rebuild your reputation along with your credit history. This also gives you sufficient time to focus on the future rather than worry about paying back your mortgages and loans that you were falling behind with. It can give you a little wiggle room with your insurance premiums as well and will not tarnish your reputation that fast. While it might seem difficult to file for bankruptcy, sometimes it is the best way to start afresh and wipe that slate clean so you can give yourself another chance without carrying any baggage.


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