Can I File Bankruptcy If I Make Over $100,000 Per Year?

Can I File Bankruptcy If I Make Over $100,000 Per Year?

A common myth is that if you earn a six-figure salary, you “make too much” to file bankruptcy. That’s simply not true. Especially in northern Virginia and the greater D.C. metro area, where housing, childcare, transportation, and everyday expenses are high, many households earning over $100,000 still struggle with debt.

Whether you qualify for bankruptcy — and which chapter makes the most sense — depends on your household income, expenses, asset structure, and the types of debt you owe. High-income professionals, government workers, contractors, healthcare workers, IT employees, and business owners file bankruptcy every day.

Bankruptcy is a financial tool — not a judgment about your success or your character.

Bankruptcy Isn’t Just for Low-Income Households

Many of our high-income clients come to us feeling embarrassed because they “should” be able to get ahead. But income alone does not determine financial stability.

Here in northern Virginia, it is very common for:

• Mortgages to exceed $3,000–$5,000 per month

• Childcare to cost $1,500–$3,000+ per child

• Car payments, student loans, and medical expenses to stack on top

Even strong salaries can be eaten up quickly. Bankruptcy exists precisely to help people who are working hard, earning money, and still unable to get ahead because debt has become unmanageable.

Understanding the Means Test

The Means Test is used to determine whether you can file Chapter 7 — a faster bankruptcy option that wipes out unsecured debts like credit cards and personal loans.

It involves two parts:

1. Compare Income to Median Income:
   If your household income is below the Virginia median for your household size, you automatically qualify for Chapter 7.

2. If Above Median — Analyze Actual Expenses:
   Even if your income is over the median, you may still qualify based on allowable expenses such as:

   • Mortgage or standard rent for the area

   • Taxes and health insurance

   • Childcare costs

   • Car payments and transportation

   • Necessary medical expenses

A well-prepared Means Test often determines the difference between qualifying for Chapter 7 or not. This is where working with an attorney who regularly represents high-income filers makes a meaningful difference.

Current Virginia Median Income Numbers (As of November 1, 2025)

The first part of the means test compares your gross household income over the past six months to the state median income for your household size. If you are at or below these numbers, you automatically pass this portion of the means test and may qualify for Chapter 7:

(For households larger than four people, add approximately $11,100 per additional household member.)

It’s important to remember that these numbers are only the automatic qualification thresholds. If your household income is above these figures, you may still qualify after completing the second part of the means test, which takes into account allowable living expenses, taxes, insurance, childcare, mortgage/rent, and other necessary costs.

That means a household of two earning around $100,000 per year may still easily qualify for Chapter 7 in Northern Virginia, where housing, transportation, and childcare costs are significantly higher than the national average. We see this scenario all the time in Fairfax, Loudoun, Prince William, and Arlington counties.

Quick Example

A married couple earning $160,000 combined is over the median (for a household of 4) — but once you factor in:

• $2,500–$4,000/month housing costs

• Healthcare premiums

• Commuting/vehicle expenses

• Childcare/daycare or after-school costs

Their allowable expenses usually reduce their disposable income, often enough to qualify for Chapter 7.

Chapter 13 Is Often a Strong Option for High-Income Filers

Even if you do not qualify for Chapter 7, Chapter 13 allows you to reorganize your debts into a structured 3- to 5-year repayment plan.

Chapter 13 is especially useful when:

• You are behind on your mortgage or car loan

• You owe recent taxes that cannot be discharged

• You want to protect assets that might not be fully exempt in Chapter 7

• Your income is too high for Chapter 7, but your expenses are also high

The payment is based on what you can reasonably afford — not the total amount you owe. For many high-income individuals and families, Chapter 13 provides breathing room, protects property, and creates predictable financial stability.

When the Means Test Doesn’t Apply: Business / Non-Consumer Cases

If more than 50% of your debt (this includes all debt) is tied to business obligations — such as SBA loans, business credit cards, payroll taxes, or personally guaranteed leases — your case may be classified as non-consumer.

In a non-consumer case, the Means Test does not apply at all. This can allow high-income business owners and contractors to qualify for Chapter 7 even when their income is well above median.

High Cost of Living in the D.C. Metro Area Helps Means Test Calculations

The Means Test uses local expense standards, and the Northern Virginia / D.C. region has some of the highest recognized housing and transportation allowances in the country.

This often works in favor of high-income filers.  A local attorney familiar with northern Virginia expenses and allowances/deductions allowed on the Means Test can often adjust and document expenses strategically to help qualify you for Chapter 7 or reduce your Chapter 13 payment.

Timing Matters — Especially If You Earn Bonuses or Overtime

The Means Test looks at the past six months of income. If you recently worked overtime, earned a bonus, or changed jobs, the timing of your filing can significantly change the outcome. We regularly help clients determine the best filing month to produce the best financial result.

💡 You don’t have to guess the right timing — start here: When Is The Right Time to File Bankruptcy? 

FAQ

Can I file bankruptcy if I’m a federal employee or have a security clearance?

Yes. Filing bankruptcy is not disqualifying. In fact, bankruptcy is often seen as more responsible than allowing debt to go delinquent or go to collections. We routinely represent clients with Top Secret and higher clearances.

What if I make too much for Chapter 7 but can’t afford Chapter 13 payments?

Chapter 13 plans must be feasible, meaning your budget must reasonably support the payment. The required plan payment can be driven by:

• Your disposable income

• The value of any nonexempt assets

• Required repayment of mortgage arrears, car arrears, or priority taxes within 60 months

If the plan payment required to:

• Catch up a mortgage,

• Pay priority taxes, or

• Account for nonexempt home equity

…is higher than your income can support, we look at other legal strategies, including:

• Adjusting the filing date

• Refinancing or modifying a mortgage

• Using Chapter 13 creatively to protect assets

• Classifying the case as non-consumer if appropriate

Feasibility is a critical analysis step — and we do it before filing, so cases don’t fail later.

Do high-income filers lose more assets in bankruptcy?

Not necessarily. Exemptions are based on asset values, not income. However, high-income filers often own more valuable assets, so we evaluate:

• Home equity (including use of Tenants by the Entirety for married couples)

• Vehicles and personal property (using Virginia’s vehicle and wildcard exemptions)

• Retirement accounts (most of which are fully protected, regardless of value)

If some equity cannot be exempted, Chapter 13 can be used to protect the asset by paying unsecured creditors the nonexempt value over time — instead of losing property in Chapter 7.

The question is not “Do you make too much?” The question is how your assets are structured and how the law protects them.

The Bottom Line

Yes — you can file bankruptcy if you make over $100,000 a year. Many high-income individuals qualify for Chapter 7. Others successfully reorganize debt under Chapter 13. The key is careful analysis and strategic planning, especially in Northern Virginia, where cost of living and household expenses are uniquely high.

Ashley F. Morgan Law, PC
4100 Lafayette Center Dr, Suite 106
Chantilly, VA 20151
📞 (703) 880-4881
🌐 AFMorganLaw.com