When considering filing for Chapter 7 bankruptcy in Arkansas, it is important to understand how far back the court will look at your income. Chapter 7 bankruptcy is a form of liquidation bankruptcy that allows individuals to discharge their debts and start fresh. However, to qualify for Chapter 7 bankruptcy, you must meet certain income requirements. This article will explore how far back the court will typically look at your income when determining your eligibility for Chapter 7 bankruptcy in Arkansas.
Income Means Test
To determine eligibility for Chapter 7 bankruptcy, individuals must pass the means test. The means test compares your income to the median income in your state. If your income is below the median, you automatically qualify for Chapter 7 bankruptcy. However, if your income is above the median, you must complete the full means test calculation to determine if you still qualify.
The lookback period refers to the timeframe during which the court will review your income to determine eligibility for Chapter 7 bankruptcy. In Arkansas, the lookback period is typically the six months leading up to the date of filing. This means that the court will review your income from the six months prior to your bankruptcy filing date.
During the lookback period, the court will calculate your average monthly income. This is done by adding up your income from all sources during the six-month period and dividing it by six. This average monthly income will be compared to the median income in Arkansas for a household of the same size to determine if you pass the means test.
There are certain exceptions to the six-month lookback period. If you have experienced a significant change in income during the six-month period, the court may consider a shorter lookback period. For example, if you recently lost your job or had a significant decrease in income, the court may only consider your income from the date of the change.
Additionally, if you are a seasonal worker or have irregular income, the court may use an alternative method to calculate your income. This may involve averaging your income over a longer period of time or using other relevant factors to determine your eligibility.
In Arkansas, the court typically looks back at your income for the six months leading up to your Chapter 7 bankruptcy filing date. This lookback period is used to calculate your average monthly income and determine if you pass the means test. However, there are exceptions to the six-month rule, particularly if you have experienced a significant change in income or have irregular income. It is important to consult with a bankruptcy attorney to fully understand the specific rules and requirements for Chapter 7 bankruptcy in Arkansas.
– United States Courts: Bankruptcy Basics: https://www.uscourts.gov/services-forms/bankruptcy/bankruptcy-basics
– Legal Aid of Arkansas: Chapter 7 Bankruptcy: https://www.arlegalservices.org/node/104/chapter-7-bankruptcy