Chapter 7 for Seattle Tech Workers: Can High Earners Qualify?
Chapter 7 for tech workers in Seattle is not impossible just because the paycheck looks high.
Many software engineers, product managers, UX designers, data workers, and startup employees earn strong salaries on paper. But Seattle rent, childcare, taxes, medical costs, RSU swings, layoffs, and debt payments can change the bankruptcy analysis. Chapter 7 eligibility depends on the means test, assets, expenses, household size, and timing.
Key Takeaways
• High income does not automatically block Chapter 7 in Washington.
• Tech compensation can complicate the 6-month income lookback.
• RSUs, bonuses, severance, and stock sales must be reviewed before filing.
Can High-Earning Tech Workers File Chapter 7 in Seattle?
Yes, some high-earning tech workers can file Chapter 7 in Seattle.
Chapter 7 is not limited to people with no income. It is available to eligible individuals who meet bankruptcy requirements and do not have enough disposable income under the legal calculation to repay creditors.
The means test starts with income.
For cases filed on or after April 1, 2026, Washington’s median income is $88,585 for a 1-person household, $107,100 for 2 people, $131,737 for 3 people, and $156,567 for 4 people. Add $11,100 for each person above 4 (U.S. Trustee Program – Median Income Table, April 1, 2026).
Many Seattle tech workers exceed these numbers.
That does not end the analysis.
If income is above median, the second part of the means test subtracts allowed expenses. These may include taxes, housing, transportation, healthcare, childcare, insurance, support payments, secured debt, and certain other deductions (U.S. Trustee Program – Means Testing Data, April 1, 2026).
A single engineer earning $170,000 may face a difficult Chapter 7 test.
A household earning $190,000 with 3 dependents, high childcare, medical costs, and housing expenses may have a different result.
The right question is not, “Do I make too much?”
The better question is, “What does the complete means test show?”
How Does the Means Test Treat Tech Compensation?
The means test looks at current monthly income, not job title.
For Chapter 7, current monthly income generally looks at the 6 full calendar months before filing. The form annualizes that average and compares it to Washington’s median income (U.S. Courts – Chapter 7 Statement of Your Monthly Income, Official Form B 122A-1).
This can create problems for tech workers.
Tech compensation may include:
• Base salary
• Bonuses
• Overtime
• Commissions
• RSUs
• Stock options
• Severance
• Signing bonuses
• Retention bonuses
• Consulting income
• Startup equity payouts
• Interest and dividends
• Rental income
• Side projects
• Crypto gains
A bonus paid in the lookback period can inflate the average.
Severance can do the same. RSU vesting, stock sales, and taxable compensation can complicate the picture. A laid-off worker may look high-income on paper even when the current job income is gone.
Timing matters.
Filing one month too early can capture a bonus month. Filing later may produce a different 6-month average if income dropped after layoff, medical leave, reduced hours, or job loss (U.S. Courts – Chapter 7 Statement of Your Monthly Income, Official Form B 122A-1).
Do not file based on a salary number alone.
Review pay stubs, W-2s, equity statements, brokerage records, RSU vesting schedules, bonus plans, severance agreements, and tax withholding.
The tech paycheck can look simple until bonuses, RSUs, layoffs, and vesting schedules enter the bankruptcy forms.
What Expenses Help Seattle Tech Workers Pass the Means Test?
Allowed expenses can reduce disposable income under the means test.
Seattle tech workers often have high gross income, but high payroll taxes and family costs. The means test uses a mix of actual expenses and IRS national or local standards (U.S. Trustee Program – Means Testing Data, April 1, 2026).
Common deductions may include:
• Federal income tax
• Social Security and Medicare taxes
• Required payroll deductions
• Health insurance
• Disability insurance
• Health savings account costs
• Housing and utilities
• Vehicle payments
• Public transportation
• Childcare
• Court-ordered support
• Necessary medical expenses
• Priority tax payments
• Secured debt payments
Some expenses count differently than people expect.
Voluntary 401(k) contributions may not help the Chapter 7 means test the way filers expect. Required payroll deductions receive different treatment than voluntary savings.
Childcare can matter. Healthcare can matter. Taxes can matter. Housing can matter.
Seattle-area housing costs can also affect the calculation through local standards. A renter in Seattle, Bellevue, Redmond, Kirkland, or Issaquah may face expenses that look high compared with national averages (U.S. Trustee Program – Means Testing Data, April 1, 2026).
But the form does not allow every actual expense.
The means test is not the same as your bank-account budget. A lawyer should compare the real budget with the bankruptcy form calculation before filing.
What Happens to RSUs, Stock Options, and Brokerage Accounts?
RSUs, stock options, and brokerage accounts must be disclosed in bankruptcy.
They may affect both income and assets.
If RSUs vested during the lookback period, they may appear as income. If unvested RSUs exist on the filing date, they may still need review as potential property interests. If shares were sold, the cash or proceeds may matter. If shares remain in a brokerage account, they are assets (U.S. Courts – Bankruptcy Forms).
Common tech asset issues include:
• Vested shares
• Unvested RSUs
• ESPP shares
• Stock options
• Brokerage accounts
• Crypto accounts
• Cash from stock sales
• Tax withholding on RSUs
• Severance pay
• Deferred compensation
• Startup equity
• Employee loans
• Relocation repayment obligations
Do not transfer stock before filing without legal advice.
Do not sell shares and repay family.
Do not move cash into crypto.
Do not omit equity because it has not fully vested.
A Chapter 7 trustee can review financial records. That may include bank statements, brokerage statements, tax records, stock plan accounts, and employer documents.
The key issue is whether the asset exists, what it is worth, and whether exemptions protect it.
Washington allows eligible filers to choose state or federal exemptions, but they generally cannot mix both systems. That choice can affect cash, stock, crypto, vehicles, and home equity (Western District of Washington Bankruptcy Court – Exemptions).
For many tech workers, the asset review is as important as the income review.
When Is Chapter 13 Better for High Earners?
Chapter 13 may be better when Chapter 7 creates too much income or asset risk.
If the means test shows a presumption of abuse, Chapter 7 may not be the right fit. Chapter 13 can allow a debtor with regular income to repay debts over 3 to 5 years under court protection (U.S. Courts – Chapter 13 Bankruptcy Basics).
Chapter 13 may help when a tech worker has:
• Above-median income
• Nonexempt stock or crypto
• Home equity to protect
• A car with high equity
• Tax debt
• Mortgage arrears
• Recent cash advances
• Recent large charges
• Lawsuit judgments
• RSUs vesting soon
• A need to stop collection pressure
Chapter 13 does not mean paying every debt in full in every case (U.S. Courts – Chapter 13 Bankruptcy Basics).
The payment depends on income, expenses, debt type, asset value, and plan requirements. Some unsecured creditors may receive less than the full balance.
Chapter 13 can also create more structure.
A high earner with temporary debt pressure may use Chapter 13 to stop lawsuits, protect assets, and reorganize payments.
A high earner with no disposable income after allowed expenses may still explore Chapter 7.
The strategy depends on the math.
High income does not answer the bankruptcy question. Disposable income, asset risk, and timing answer it.
How Should a Seattle Tech Worker Prepare Before Filing?
Start with the last 6 months of income records (U.S. Courts – Chapter 7 Statement of Your Monthly Income, Official Form B 122A-1).
Then add every equity, bonus, and asset document. Tech workers often need a more detailed bankruptcy review than traditional wage earners.
Prepare these records:
• Last 6 months of pay stubs
• W-2s and 1099s
• Most recent tax returns
• Bonus history
• Severance agreement
• RSU vesting schedule
• Stock plan account records
• Brokerage statements
• ESPP statements
• Crypto wallet and exchange records
• Bank statements
• Retirement account statements
• Mortgage or lease records
• Childcare bills
• Medical bills
• Car loan statements
• Student loan records
• Credit card statements
• Collection lawsuit papers
Then ask 5 questions:
• What is my 6-month average income?
• Did bonuses or RSUs inflate the lookback period?
• What assets exist on the filing date?
• Which exemptions protect those assets?
• Would Chapter 7 or Chapter 13 leave the better result?
Do not wait until a lawsuit, garnishment, or bank levy starts.
Early planning can improve timing, reduce risk, and help protect assets.
Frequently Asked Questions
Q: Can I file Chapter 7 in Seattle if I make over $100,000?
A: Yes, it may be possible. For cases filed on or after April 1, 2026, Washington’s median income is $88,585 for a 1-person household and $107,100 for 2 people. If you are above median, you still complete the second part of the means test. Allowed expenses may reduce disposable income enough to qualify.
Q: Do RSUs count in the Chapter 7 means test?
A: RSUs can affect a bankruptcy case. Vested RSUs may show up as income, especially if they appear in payroll records during the 6-month lookback period. Shares, stock plan accounts, or proceeds may also be assets. Unvested RSUs need legal review because timing, vesting rights, and value can affect the case.
Q: What if I was laid off from a Seattle tech job?
A: A layoff can change the Chapter 7 analysis. The means test still looks at the 6 full calendar months before filing, so severance, bonuses, or recent high wages may affect the numbers. But timing may help if income dropped. A lawyer can review whether waiting changes the calculation and whether urgent creditor action requires faster filing.
Q: Is Chapter 13 better for high-income tech workers?
A: Chapter 13 may be better if Chapter 7 creates income problems, asset risk, or exemption issues. It can help protect stock, home equity, cars, and other assets while reorganizing debt over 3 to 5 years. Chapter 7 may still fit if the means test shows limited disposable income after allowed deductions.
Ready to See Whether High Income Blocks Chapter 7?
Do not assume a tech salary automatically disqualifies you from bankruptcy relief.
Bonuses, RSUs, severance, layoffs, taxes, childcare, housing, medical costs, and exemptions all matter.
The Law Firm of Howard Williams can help Seattle tech workers review Chapter 7, Chapter 13, the Washington means test, stock compensation, and asset-protection options.
Contact the Law Firm of Howard Williams today to discuss your next step.
About Howard Williams
Attorney Howard Williams is a Washington-based bankruptcy attorney and founder of the Law Firm of Howard Williams. He helps clients in Seattle, King County, and across Washington evaluate Chapter 7, Chapter 13, exemptions, creditor pressure, and debt-relief options.
