Do You Earn Too Much for Chapter 7 in Kentucky?

One question stops people from even asking for help. They assume they make too much money to file Chapter 7. In most cases, that assumption is wrong. The rule that decides it is called the means test, and it trips up fewer people than you would think.

Most Filers Pass

Here is the headline. About 95 percent of filers pass at least one step of the means test. The test was added in 2005 to keep Chapter 7 aimed at people who truly need it. In practice, it mostly affects the top few percent of earners. If you are a normal wage earner who fell on hard times, the odds are in your favor.

Step One: The Median Income Test

The test runs in two steps, and you only have to pass one of them. Step one is the median income check. The court adds up your household income from the six full months before you file. The month you file does not count. It then compares that number to the median income for a Kentucky household of your size.

Those median figures are not made up by your lawyer. They are published by the U.S. Trustee Program and updated on a regular basis. For example, recent figures set the line near 61,000 dollars for a single person and higher for larger households. If your income lands below the line for your household size, you pass step one and you are done.

Step Two: The Disposable Income Test

What if you earn more than the median? You are not out. That is what step two is for. Step two is the disposable income test. It subtracts your allowed living expenses from your income to see what is truly left over each month. The point is to measure what you could realistically pay back, not just your gross pay.

This is where good preparation matters. Many people earn above the median yet still qualify, because their real expenses leave little or nothing to give creditors. A careful expense review can be the difference between passing and failing. If you want a clear walk-through of how the Kentucky Chapter 7 means test works, it is worth reading before you decide anything.

Details That Surprise People

A few details surprise people. Not all income counts the same way. Some sources are left out of the calculation. The test uses a six-month average, so one good month or one bad month won’t decide your whole case. And the numbers change over time, so the figures in effect on your filing date are the ones that matter.

You can confirm the official figures yourself. The Department of Justice posts the current median income tables and the rules behind them on its means testing page. It is the same data the courts use, so you are looking at the real source, not a guess.

What If You Don’t Pass?

If you fail both steps, the news still isn’t all bad. Chapter 13 is usually available, and it can stop foreclosure, stop garnishment, and set up a plan you can handle. So even a high earner facing real trouble has a path forward.

Run Your Real Numbers

The takeaway is simple. Don’t talk yourself out of help based on a guess about your paycheck. The math is more forgiving than most people expect, and the only way to know for sure is to run your real numbers.Nick Thompson has guided Louisville-area filers through the means test since the rule took effect in 2005, and his office keeps its caseload small so every petition gets real attention. Call 502-625-0905 for a free check of whether your income qualifies.