Though it’s often viewed as a taboo or embarrassing topic, the large majority of Americans are in some form of debt. If you have struggled to get your finances under control, it’s important to understand your options to help you manage your debt. In general, those who exhaust all options may be left to file for bankruptcy. However, if you are considering this option, you may wonder if there is an income limit for this process. The following blog explores what you should know about these matters, including the importance of working with a Montgomery County bankruptcy lawyer to assist you during this process.
Is There an Income Limit for Bankruptcy?
Those who earn a higher income but would benefit from bankruptcy may worry that their income will impact their ability to file. Typically, this would only impact those looking to pursue Chapter 7 bankruptcy. This is because Chapter 7 is limited by a means test. As such, those who wish to pursue this option must compare their average monthly income to the median income of other households of their size in the state. As of 2025, the median household income for a family of four in Pennsylvania is $10,479. If your average monthly income falls below this number, you can pursue Chapter 7.
It’s important to understand that if you are above the median income, you may be able to make eligible deductions to help you qualify. For example, you may be able to subtract payments like rent or mortgages, health insurance, utilities, and groceries, among others.
Chapter 13, on the other hand, does not have any income limitations. As such, you can pursue this option regardless of how much money you make. Chapter 13 is a repayment plan in which those who are in debt can pay back creditors with one monthly payment over 3 to 5 years.
What Should I Do if I Earn Too Much for Chapter 7?
In the event your income is too high for Chapter 7 even after making eligible deductions, you are not automatically disqualified from pursuing bankruptcy. Instead, you can file Chapter 13. This process, though significantly longer than Chapter 7, often allows the filer to protect their assets while catching up on payments to creditors.
Unfortunately, bankruptcy can be an overwhelming process to navigate, and making errors during the filing process can lead to even more stress. As such, it is in your best interest to connect with an experienced attorney to guide you through this process. At Mudrick & Zucker, P.C., our team will do everything in our power to assist you through these difficult times to help you reap the full benefits of filing for bankruptcy. When you need help, connect with our team to learn how we can help you.
