How to Use This Calculator
- 1
Enter Your Financial Details
Input your total assets, total liabilities, exempt assets, non-exempt assets, monthly income, and monthly expenses. For example, $100,000 in assets, $120,000 in liabilities, $30,000 exempt, $50,000 non-exempt, $3,000 income, and $2,800 expenses.
- 2
Review Your Bankruptcy Analysis
The calculator displays three result cards — Net Worth, Debt-to-Annual-Income ratio, and Creditor Recovery Rate — plus an insights panel with monthly cash flow, insolvency gap, non-exempt repayment timeline, and chapter guidance.
Example Calculation
An insolvent household with $100,000 in assets, $120,000 in liabilities, $50,000 in non-exempt assets, and a small monthly surplus evaluates their bankruptcy position.
Total Assets ($)
$100,000
Total Liabilities ($)
$120,000
Exempt Assets ($)
$30,000
Non-Exempt Assets ($)
$50,000
Monthly Income ($)
$3,000
Monthly Expenses ($)
$2,800
Results
Net Worth
-$20,000 (Insolvent)
Debt-to-Annual-Income
333.3% (Severe — Chapter 7 likely appropriate)
Creditor Recovery Rate
41.7% (Partial recovery for creditors)
Insights card shows $200/mo surplus (7% discretionary), $20,000 insolvency gap, 250 months to repay non-exempt assets, and Chapter 7 guidance due to high DTI.
Tips
Reclassify Assets to Lower Recovery Exposure
Increasing exempt assets from $30,000 to $60,000 (and non-exempt from $50,000 to $20,000) drops the creditor recovery rate from 41.7% to 16.7% — a 25 percentage-point reduction. Check your state's homestead and retirement exemptions to maximize protected assets.
Cut $200/Month in Expenses to Halve Repayment Time
Reducing monthly expenses from $2,800 to $2,600 doubles your surplus from $200 to $400, cutting the non-exempt asset repayment timeline from 250 months to 125 months. Even small expense reductions compound significantly when evaluating Chapter 13 feasibility.
Higher Income Transforms Your Chapter Options
Increasing monthly income from $3,000 to $4,000 produces a $1,200 surplus and drops your DTI from 333.3% to 250.0%. Non-exempt assets become repayable in just 42 months — well within the Chapter 13 window of 36-60 months.
Lower Debt Flips Net Worth Positive
Reducing liabilities from $120,000 to $80,000 turns your net worth from -$20,000 to +$20,000 and raises the creditor recovery rate from 41.7% to 62.5%. Negotiating settlements or paying down high-interest debt before filing can fundamentally change your bankruptcy calculus.
Formulas and Key Metrics
The calculator uses these core formulas to assess your bankruptcy position:
net worth = total assets - total liabilities
debt-to-annual-income = (total liabilities / (monthly income x 12)) x 100
creditor recovery rate = min((non-exempt assets / total liabilities) x 100, 100)
monthly surplus = monthly income - monthly expenses
insolvency gap = total liabilities - total assets
months to repay non-exempt = non-exempt assets / monthly surplus
With the default inputs ($100,000 assets, $120,000 liabilities, $50,000 non-exempt, $3,000 income, $2,800 expenses), these produce: net worth of -$20,000, DTI of 333.3%, creditor recovery of 41.7%, monthly surplus of $200, insolvency gap of $20,000, and 250 months to repay non-exempt assets.
Worked Example: Single Parent Evaluating Bankruptcy
Consider a single parent with $150,000 in assets (home $120,000, car $15,000, savings $15,000), $220,000 in liabilities (mortgage $80,000, car loan $10,000, credit cards $60,000, student loans $70,000), $75,000 exempt, $75,000 non-exempt, $3,500 monthly income, and $3,200 monthly expenses.
| Metric | Value |
|---|---|
| Net Worth | -$70,000 |
| Monthly Surplus | $300 |
| DTI | 523.8% |
| Insolvency Gap | $70,000 |
| Creditor Recovery | 34.1% |
| Months to Repay Non-Exempt | 250 |
The -$70,000 net worth and 523.8% DTI indicate severe insolvency.
At $300/month surplus, repaying $75,000 in non-exempt assets takes 250 months — far beyond the 60-month Chapter 13 limit.
Chapter 7 is likely the more practical path here.
Chapter 7 vs. Chapter 13 Decision Framework
The calculator's outputs map directly to the Chapter 7 vs. Chapter 13 decision:
- Chapter 7 indicators: DTI above 400%, creditor recovery below 25%, repayment timeline exceeding 60 months, negative monthly surplus
- Chapter 13 indicators: DTI between 200-400%, positive monthly surplus sufficient to cover non-exempt assets within 60 months, desire to keep non-exempt property
With the default inputs, DTI at 333.3% falls in the high range and the 250-month repayment timeline far exceeds 60 months.
However, increasing income to $4,000/month would create a $1,200 surplus, dropping DTI to 250.0% and making non-exempt assets repayable in 42 months — shifting the analysis firmly toward Chapter 13.
Frequently Asked Questions
How does the calculator determine net worth?
Net worth is calculated as total assets minus total liabilities. With $100,000 in assets and $120,000 in liabilities, the formula yields $100,000 - $120,000 = -$20,000. A negative net worth indicates insolvency — your debts exceed everything you own.
What does the debt-to-annual-income ratio mean for bankruptcy?
The DTI ratio divides total liabilities by annual income: ($120,000 / ($3,000 x 12)) x 100 = 333.3%. Below 200% is manageable, 200-400% suggests Chapter 13 may be viable, and above 400% typically points toward Chapter 7 liquidation. This ratio helps courts and attorneys assess repayment capacity.
How is the creditor recovery rate calculated?
The creditor recovery rate equals non-exempt assets divided by total liabilities, capped at 100%: ($50,000 / $120,000) x 100 = 41.7%. This means creditors would recover roughly 42 cents on every dollar owed if all non-exempt assets were liquidated in Chapter 7.
What monthly surplus do I need for Chapter 13 feasibility?
Chapter 13 plans run 36-60 months. To repay $50,000 in non-exempt assets within 60 months, you need at least $834/month in surplus ($50,000 / 60 = $833.33, rounded up). With the default $200/month surplus, repayment takes 250 months — far beyond the 60-month limit, making Chapter 13 impractical without increasing income or cutting expenses.
What is the insolvency gap and why does it matter?
The insolvency gap is total liabilities minus total assets: $120,000 - $100,000 = $20,000. It measures how far underwater you are. A larger gap generally strengthens eligibility for Chapter 7, since it demonstrates that even full asset liquidation cannot satisfy your debts.
How do exempt vs. non-exempt assets affect my bankruptcy outcome?
Exempt assets (like retirement accounts and homestead equity) are protected from liquidation. Only non-exempt assets are at risk. With $50,000 non-exempt out of $120,000 in liabilities, creditors recover 41.7%. If you reclassify $30,000 to exempt (dropping non-exempt to $20,000), recovery drops to 16.7% — significantly reducing what creditors collect.