Can I File For Bankruptcy In Chandler, Arizona If I Earn $120K+?

It’s becoming more and more expensive to live in Chandler, Arizona every year. It’s no wonder that people in Chandler tend to have relatively high income, with an average household income of approximately $138K and a median household income of $108K. But with the cost of living, it isn’t hard to fall behind on bills and accrue debts, even with a six-figure income. And sometimes it is impossible to escape from overwhelming debt without some legal support. Bankruptcy is a powerful form of debt relief, and thousands of Chandler residents have resolved their financial issues with chapter 7 and chapter 13 bankruptcy. But they get the best results when represented by experienced legal counsel. Schedule your free consultation with our Zero Down Chandler Bankruptcy firm today by calling 480-833-8000.

Household Income in a Chandler Bankruptcy Filing

When a resident of Chandler files for bankruptcy, they will use the whole of Arizona as a comparison for income qualification purposes. That comparison is relevant in both chapter 7 and chapter 13 bankruptcy, although in different ways.

Chapter 7 bankruptcy debtors can use two methods for income qualification: household income comparison and the means test. If a debtor’s household income is less than the state median household income, they qualify for chapter 7 bankruptcy. This will rule out most people who earn more than $120,000 per year. But this method also considers how many people are in the debtor’s household, or a spouse and minor children. For an individual in Arizona, the median income is $73,935. For two people, it is $89,027, and for three, it is $104,965. So if a person earning $120K has three people or fewer in their household, they will need to try the means test to qualify for chapter 7 bankruptcy. The median household income for a family of 4 in Arizona in 2026 is $121,174. After that, the debtor can add $11,100 per household member. So if a debtor makes $120K but has a household of 4 or more people, they should be eligible for chapter 7 bankruptcy.

The alternative method of qualifying for chapter 7 bankruptcy is the means test. This test subtracts mandatory expenses from monthly income to find disposable monthly income. This is how much a debtor could potentially afford to pay towards their total debt balance each month. If that number is negative, zero, or very low, the debtor can’t afford to maintain a reasonable standard of living while paying off their debts. Therefore, they are income-eligible for chapter 7 bankruptcy. This could allow someone who makes $120K+ to qualify for chapter 7 if they have bills that quickly chip away at their relatively high income.

To qualify for chapter 13 bankruptcy, the debtor needs to use the means test to show they can afford to pay off certain categories of debt during their payment plan. How long that payment plan lasts depends on how their household income compares to the chart. If their income is lower than the median household income prescribed for their family size in that chart, the payment plan lasts 3 years. If it is higher, the payment plan lasts 5 years. Making $120K+ makes it easier to qualify for chapter 13, but could result in a longer payment plan and more non-mandatory debts being repaid in the plan. Unsecured debts only have to be repaid to the extent the debtor can afford, so someone who just barely qualifies for chapter 13 might not have to pay those debts at all, while a high-income debtor will likely need to be pay off significant amounts of unsecured debt in their payment plan. It will all vary on a case by case basis.

Protecting Assets in a High-Income Bankruptcy Filing

Showing income eligibility is just the first part of an efficient bankruptcy filing. But when someone earns six figures, especially if they have been for a decent number of years, they may have accrued some valuable assets over time. In some instances, a bankruptcy debtor is expected to give up valuable assets if they file for bankruptcy so they can be liquidated to repay their creditors. This is why it’s important to be familiar with Arizona’s bankruptcy exemptions before filing.

Assets that aren’t protected by bankruptcy exemptions are seized in chapter 7 bankruptcy to pay debts. The trustee will sell them at auction and keep a portion of the sale proceeds as their payment. The exemption amounts set forth in Arizona reflect a reasonable standard of living- nothing excessive. That means someone making six figures is more likely to have non-exempt assets, but you can review some of them for yourself below:

The homestead exemption: The exemption meant to protect a house, condo, townhome, mobile home (not an RV), or the proceeds of a home sale within the past 18 months. Arizona’s homestead exemption is currently worth $400,000.
The motor vehicle exemption: The exemption meant to protect a debtor’s car. This exemption can be doubled for married couples by applying the exemption twice to two separate vehicles or doubling the exemption to apply to a single vehicle. This exemption is currently worth $15,000 in Arizona, although it increases to $25,000 if the debtor has a physical disability requiring specialized equipment in their vehicle.
The household goods and furnishings exemption: This is the exemption meant to protect almost everything inside a debtor’s home, like furniture, appliances, household wares, and more. This exemption is currently worth $15,000 in Arizona but should be increased each year to reflect inflation.
The retirement savings accounts exemption: The exemption meant to protect a 401(k), Roth IRA, or other government-backed retirement savings account. This exemption generally has no limit in consumer bankruptcy.

If you have assets that don’t fall under applicable bankruptcy exemptions, they will be in jeopardy if you file for chapter 7 bankruptcy. In chapter 13 bankruptcy, non-exempt assets can increase a debtor’s payments into a plan without them being at risk of being seized and sold at auction. If you are unsure about whether any of your assets are safe in a bankruptcy filing, have your situation assessed by an experienced bankruptcy professional.

Don’t Assume You’re Excluded from Bankruptcy for Earning Six Figures. Contact Our Chandler Bankruptcy Firm for More Information Today.

Many people assume that bankruptcy is only for people who have a relatively low household income. However, debt can happen to anyone, even those who earn what looks like a high salary on paper. There are debt relief options for Arizona residents who earn $120,000 per year or more. But because higher income households may have more at risk in bankruptcy, it’s more important to retain quality legal counsel for a potential case. Chapter 13 cases have an abysmal success rate when filed under self-representation. Why not let a bankruptcy firm handle the heavy lifting in a bankruptcy filing so you can focus on the other most important parts of your life? If cost is the answer to that question, our firm offers flexible payment plan options starting as low as Zero Dollars Down. Schedule your free consultation with Chandler Bankruptcy Lawyers today by calling 480-833-8000.