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Income too high for 7?

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Income too high for 7?

Hi everyone. This is my first post. I just started considering filing for bankruptcy and have an appointment tomorrow with an attorney who is also a tax attorney.

I have $87K in back taxes for which I have an installment plans

I have $40K in CC debt because I put estimated tax payments on them.



My tax installments montly equal $2560

My CC minimum payments monthly equal $1350

Each month I have to put aside $2000 for estimated taxes

After I pay rent/health and car insurances/car lease/medications/groceries/business rent/cell/utitilites, etc... I'm left with a couple hundred bucks. I feel like I can never ever get ahead or make any kind of dent in this debt. This year I was only able to save $4K toward my estimated taxes so I have no idea how I'll come up with the $20K more I will need by April. 


I make a good income, but I have no money. I've cut everything from my budget and have sold off so many things over the years. I fear I won't qualify for a chapter 7.


Any thoughts??



Message 1 of 10
Community Leader
Senior Contributor

Re: Income too high for 7?

What is your income? A couple hundred bucks left over could make the difference between a 7 and a 13.

EXP 763 TU 793 EQ 734
Message 2 of 10
New Member

Re: Income too high for 7?

This year it will be right around $120K. The mean income for my state is $46K


If my only choice is a 13 I will just suck it up and keep paying minimums forever.


Message 3 of 10
Established Member

Re: Income too high for 7?


How old are the taxes?  In general, bankruptcy does not get rid of tax debt. 

Message 4 of 10
New Member

Re: Income too high for 7?


I've read that I can, if I meet these qualifications (I do).


  • The taxes are income taxes.
  • You did not commit fraud or willful evasion.
  • The debt is at least three years old.
  • You filed a tax return.
  • You pass the "240-day rule." (The income tax debt must have been assessed by the IRS at least 240 days before you file your bankruptcy)


Message 5 of 10
New Member

Re: Income too high for 7?

Update: Went to the attorney. He told me my income will kick me out of 7 and being in 13 would be no different than how I'm living now.

Message 6 of 10

Re: Income too high for 7?

I can relate.  I recently decided to avoid another BK, and I'm tied up in $2-3k monthly tax payments (in my case they'll probably go up in time).


One thing that the 13 would have given me is an end to the interest on tax debt and forcing the tax agencies to a livable monthly payment.  What worried me most is the structure and my families' ability to work within structure for such an extended period of time (5 years for you and me both).  Looking several years out and seeing college expenses coming, the better option for me was to earn more and wiggle my way through as best I can.


Oddly, the IRS gave me a workable monthly payment out of the blue.  The state is not so easy, and it's currently giving me insomnia, but I'm hoping we get a resolution this month or early next.  Having issues with both the state and the irs was a real problem - with neither willing to agree to a payment plan first for 2 years.


While I am paying more in interest, I am not paying the percentage that the trustee would have received.  And I have financial flexibility that gives me both the incentive and capability to earn more.


Time will tell if this turned out to be a good decision.  If I end up going without work at some point in the next 4 1/2 years it will probably have been a bad one.  (At least with BK there's a fixed time limit.  Going this route, if I go without work, the collection SOL is stayed).  If I _can_ pay for the first year of college in 3 years, it'll be a good one.  That will likely require a loan, but taking out a loan to support an 18 year old when you are in the middle of a BK13 is not something my lawyer thought was going to be likely. 



Starting Score:EXP: 616 (2/2015) TU: 602 (2/2015) EQ: 565 (7/2013)
Current Score: EXP: 685 TU: 674 EQ: 674
Goal Score: 700
Message 7 of 10
New Member

Re: Income too high for 7?

Good luck. Hopefully your college-aged kid can get some financial aid and scholarships to help!

I called a family law atty this morning to set up a consultation about restructuring my alimony. I know it will mean receiving probably 50% of what I would if I continued with the current arrangement, but I would be completely debt free, and without a bk on my record. Then I'll just work my butt off to build my business and support myself. Right now I have $0 left at the end of the month (and I am a strict budgeter). If I were debt free and my income was 40% of what it is with monthly alimony, I'd have a couple thousand left at the end of the month. Crazy.

Message 8 of 10
Community Leader
Super Contributor

Re: Income too high for 7?

@AKAMellie wrote:

This year it will be right around $120K. The mean income for my state is $46K


If my only choice is a 13 I will just suck it up and keep paying minimums forever.


@AKAMellie, is there any way you can downsize for a few years? I didnt see mention of kids, but if you live in a house, can you sell it and move to apartment for a few years? Or take in a roommate for awhile?   If you have family somewhat near by, can you move in with them for awhile? I know this doesnt sound glamorous by any means, but my friend work M-F 9-5, and then delivers pizza twice a week. She was shocked at how much cash she made in tips in one week. ($100-$200) for just a few hours during the week, and on Saturday.  Its a thought... or be an Ube ror Lyft driver? 

My rebuild worked for me, but won't necessarily work for you!
BK7 D/C- 08/2013
Message 9 of 10
New Member

Re: Income too high for 7?

Thanks for your response.


I should have mentioned - I'm 59 years old. I own a business that is just a year old, and has been steadily growing. I've never pushed very hard to grow it more, so that's how I will increase my income. I've downsized and sold off everything over the last several years - mostly because I wanted to, but also to reduce expenses.

Message 10 of 10
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