Can You File for Bankruptcy If You Have Income?

Many people believe they can’t file for bankruptcy because they still have income — but that’s not true. Bankruptcy isn’t just for those with no income at all. In fact, many people who file have steady jobs or recently lost high-paying positions.

Here’s how it works: bankruptcy law uses something called the means test — a standardized formula that helps determine if you qualify for Chapter 7 bankruptcy. The test looks at your average income over the past six months, so it’s not just about what you make right now, but what your financial picture has been recently.

For example, let’s say you were making $200,000 a year but recently lost your job. You’ve been on unemployment for the past few months and are struggling to keep up with your bills. Even though you used to make a high income, your current situation may still qualify you for Chapter 7 bankruptcy because the means test considers your most recent six months of income.

It’s important to know that timing matters. If you’ve recently received a large bonus or had an unusually high month of income, you may be able to wait a few months until that falls outside the six-month calculation. On the other hand, if you’re currently out of work or your income has dropped significantly, this could be the best time to file and eliminate debt before your financial situation changes again.

If you’ve lost a job, had your hours reduced, or are struggling to keep up with payments — even if you expect to start earning more soon — now is the time to talk to a bankruptcy attorney. Acting quickly could help you discharge overwhelming debt so that when your income returns, your paycheck goes toward your future, not old debt.

At Shuster Law Firm, we help Texans make the most of their financial reset. Let us guide you through the process and protect your assets while giving you the fresh start you deserve.

📞 Call today at 972-362-6580 for a free consultation. We handle bankruptcy cases across Texas.