Do I Qualify For Bankruptcy, Median Income Part 2 of 9

In this second part of a nine part series we examine the Median Income Test. Assuming you qualify to proceed as an individual voluntary debtor, one must determine the Current Monthly Income [CMI] received by the debtor over the past six months. CMI is loosely defined at Section 101(10) 10A and B as the average monthly income debtor received from all sources, including any amount received on a regular basis for household expenses, during the six months preceding the month of filing bankruptcy. CMI does not include Social Security, and various types of payments to victims of certain crimes. You do not count income received during the month of filing. It is unclear whether worker compensation that is paid under the Social Security Act is excluded.

CMI must be compared to the median income figures established for your individual state. This is a state specific determination that varies across the nation. See the table below for the allowable figures in Illinois.

Median Income Figures for Illinois as of April 1, 2007

Household Size Annual Income Monthly Income
1 $42995 $3583
2 54599 4550
3 64184 5349
4 74705 6225
5 81605 6800
6 88505 7375
7 95405 7950
8 102305 8525

For each additional person add $6900 to annual income, $575 to monthly income.

If your gross monthly income exceeds the average monthly income for your applicable household size, you fail the Median Income Test and there exists an initial presumption of abuse. This is preliminary determination and requires completion of the Means Test. The Means Test compares your monthly expenses with allowable local, state and national Internal Revenue Standards.

Other installments in this series examine the eligibility, the Means Test deductions, debt limits, exempt property and discharge as considerations of filing bankruptcy.

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