What happens if I file for bankruptcy before I retire?

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  1. Depends on what you are trying to accomplish and when. The bankruptcy code (since 2005) has instituted an income threshold requirement. This threshold determines whether you qualify for a chapter 7. If you are over the threshold amount for your family size, then there is a legal presumption that you could pay your creditors back something. This threshold or means test looks at your household income and the number of household members. Here is a link to a means threshold calculator for New York state. As you can see, the more family members (dependents) of your household the higher the income threshold. If you are over the threshold amount for your family size, then obviously you would want to wait until retired (assuming you qualify) to file. The means test looks at six (6) months of your income (including any benefits, pensions).

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