Bankruptcy Means Test Gets Meaner

13 Oct Bankruptcy Means Test Gets Meaner

Irony

The bankruptcy means test gets meaner on November 1, 2010, when falling income guidelines go into effect. Consumers thinking of filing bankruptcy who may be close to the median income line should compare the BEFORE and AFTER figures. Filing bankruptcy by Halloween may be a good idea for some consumer debtors.

It is no surprise that in this down economy, with so many people without jobs or earning significantly less than in the past, that the American median family income is dropping. As the income drops, so do the guidelines for bankruptcy. Ironically, as one makes less money and has more financial problems, it becomes harder to qualify for chapter 7 bankruptcy.

The bankruptcy means test relies on the median family income by family size compiled by the U.S. Census Bureau. These figures are updated periodically. The U.S. Trustee Program announced the figures to be applied to bankruptcy cases filed on and after November 1, 2010, yesterday.

In Kansas, for example, median income dropped for one, two and four person households and increased $604 for three person households. The result will vary from state to state and household size to household size. On average, an estimated five per cent drop in income was anticipated in these new census figures.

The means test was created to determine one’s ability to pay her general unsecured creditors. Consumers with income below the median, generally, may file a chapter 7 or chapter 13 bankruptcy. Debtors with income above the median, must complete a long, complicated form detailing income and expenses, and may be required to file a chapter 13 payment plan.

This is not the first time income has dropped.

Here is a chart of the Census Bureau Median Family Income by Family Size for consumer bankruptcy cases filed on and after November 1, 2010:

(Cases Filed On and After November 1, 2010)

The following table provides median family income data reproduced in a format designed for ease of use in completing Bankruptcy Forms 22A and 22C.

TheState Median Family Income by Family Size data is available for download in MS Excel format. [XLS – 27 KB]

. FAMILY SIZE
STATE 1 EARNER 2 PEOPLE 3 PEOPLE 4 PEOPLE*
ALABAMA $38,018 $46,143 $51,613 $62,983
ALASKA $51,112 $74,242 $80,133 $84,577
ARIZONA $41,915 $54,510 $58,696 $66,030
ARKANSAS $32,304 $43,370 $48,799 $53,523
CALIFORNIA $47,234 $61,954 $67,562 $77,596
COLORADO $47,814 $63,635 $69,717 $82,621
CONNECTICUT $56,929 $70,800 $82,305 $101,647
DELAWARE $47,634 $61,424 $67,412 $83,928
DISTRICT OF COLUMBIA $48,034 $78,878 $78,878 $78,878
FLORIDA $39,383 $49,321 $53,713 $64,084
GEORGIA $38,748 $51,184 $55,767 $68,122
HAWAII $49,846 $63,143 $74,449 $85,190
IDAHO $38,420 $47,863 $54,558 $60,488
ILLINOIS $45,607 $59,104 $68,782 $79,788
INDIANA $39,487 $50,279 $58,075 $68,109
IOWA $39,803 $55,132 $62,485 $74,349
KANSAS $40,982 $56,251 $63,816 $68,154
KENTUCKY $36,999 $44,353 $51,046 $62,739
LOUISIANA $37,493 $45,950 $54,800 $66,154
MAINE $38,860 $50,767 $58,097 $67,361
MARYLAND $54,874 $73,291 $85,746 $101,693
MASSACHUSETTS $54,161 $67,142 $82,385 $100,462
MICHIGAN $41,875 $49,919 $59,190 $70,600
MINNESOTA $45,022 $60,694 $72,886 $83,772
MISSISSIPPI $32,131 $40,908 $46,299 $54,812
MISSOURI $38,697 $50,295 $57,664 $68,705
MONTANA $37,954 $51,566 $55,357 $66,825
NEBRASKA $38,287 $53,251 $64,429 $69,950
NEVADA $42,346 $56,612 $59,802 $69,371
NEW HAMPSHIRE $50,630 $62,509 $81,134 $88,538
NEW JERSEY $58,107 $69,539 $84,192 $99,474
NEW MEXICO $36,672 $51,018 $51,459 $52,842
NEW YORK $45,548 $56,845 $67,292 $82,587
NORTH CAROLINA $37,171 $49,813 $54,573 $66,487
NORTH DAKOTA $40,774 $55,501 $68,209 $78,352
OHIO $40,091 $50,491 $59,275 $71,453
OKLAHOMA $36,289 $48,909 $53,261 $63,004
OREGON $43,986 $54,656 $59,546 $71,593
PENNSYLVANIA $44,172 $52,839 $66,030 $78,626
RHODE ISLAND $45,391 $57,567 $71,019 $87,163
SOUTH CAROLINA $36,457 $49,685 $51,887 $62,056
SOUTH DAKOTA $35,008 $52,581 $57,845 $66,918
TENNESSEE $37,528 $46,432 $52,368 $62,197
TEXAS $37,676 $54,288 $55,534 $64,420
UTAH $49,818 $55,220 $60,944 $68,707
VERMONT $42,347 $57,013 $64,767 $77,127
VIRGINIA $49,484 $62,586 $72,078 $85,586
WASHINGTON $49,124 $62,204 $71,354 $81,269
WEST VIRGINIA $39,109 $41,919 $50,521 $59,307
WISCONSIN $40,486 $55,175 $65,187 $76,188
WYOMING $45,427 $59,847 $68,553 $75,129
* Add $7,500 for each individual in excess of 4.
COMMONWEALTH OR
U.S. TERRITORY
FAMILY SIZE
1 EARNER 2 PEOPLE 3 PEOPLE 4 PEOPLE*
GUAM $35,891 $42,913 $48,902 $59,178
NORTHERN MARIANA ISLANDS $24,101 $24,101 $28,040 $41,242
PUERTO RICO $20,930 $20,930 $22,640 $27,924
VIRGIN ISLANDS $28,476 $34,225 $36,491 $39,980
* Add $7,500 for each individual in excess of 4.

Source: U.S. Trustee median_income_table 11 01 2010
 

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Jill Michaux has helped Kansas consumers with debt problems for three decades. She and her partner, Mark Neis, are Topeka's only bankruptcy specialists, board certified in consumer bankruptcy law by the American Board of Certification. She help start the National Association of Consumer Bankruptcy Attorneys.
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