Meet Sarah from Ohio. She earns $75,000 per year but has accumulated $45,000 in credit card debt and medical bills after an unexpected surgery. Her $350,000 home (purchased with 20% down) has a 30-year mortgage at 6.5% APR, leaving her with monthly payments she's struggling to afford alongside her other debts. She's heard bankruptcy could help, but she's terrified of losing everything she's worked for. Sound familiar? A bankruptcy calculator can help you understand whether you qualify for Chapter 7 or Chapter 13, estimate what debts might be discharged, and see how your income compares to your state's median income threshold. Instead of guessing, you'll get real numbers to make an informed decision about your financial future.
How to Use
Using a bankruptcy calculator is straightforward. First, enter your gross annual income (like $75,000 per year). Next, list all your debts—credit cards, medical bills, personal loans. Then input your assets, including your home value and any savings. The calculator compares your income to your state's median and estimates which bankruptcy chapter you may qualify for. Results appear in seconds.
Pro Tips
Before filing, maximize your 401k contributions—money in qualified retirement accounts is generally protected from creditors. Time your filing strategically; if you recently received a bonus, wait until next year to avoid inflating your income for the means test. If you own a $350,000 home with equity, research your state's homestead exemption—it determines how much equity is protected. Finally, complete a credit counseling course from an approved agency within 180 days before filing. This is mandatory under U.S. bankruptcy law, and skipping it will get your case dismissed immediately.
Common Mistakes to Avoid
Many Americans assume they'll lose everything in bankruptcy—including their 401k. In reality, retirement accounts with that 6% employer match are typically protected under federal law. Another mistake is waiting too long. If you're draining your retirement savings to pay credit cards, you're spending protected assets on debts that could be discharged. A third error? Ignoring the means test. Even with a $75,000 salary, you might still qualify for Chapter 7 if your allowable expenses are high enough. The calculator helps you see where you stand before spending money on an attorney consultation.
Frequently Asked Questions
Will filing bankruptcy make me lose my home?
Not necessarily. If your $350,000 home has a mortgage and limited equity, you may keep it by continuing payments. Each state has homestead exemptions that protect a certain amount of equity—some states protect unlimited equity, while others cap it between $30,000 and $175,000 depending on filing status.
How does the means test work with a $75,000 salary?
The means test compares your household income to your state's median for a family of your size. If you earn $75,000 and your state median is $68,000, you may still pass if your allowable expenses—mortgage interest, taxes, healthcare, and transportation—reduce your disposable income below the threshold for Chapter 7.
What debts can't be discharged in bankruptcy?
Student loans, recent tax debts (usually under 3 years old), child support, alimony, and debts from fraud typically cannot be discharged. Credit card debt, medical bills, and personal loans are commonly dischargeable. An attorney can review your specific situation.