Usually the first question that I receive from a prospective client who is considering bankruptcy is whether he qualifies to file a Chapter 7 Bankruptcy. The answer to this question primarily depends upon the debtor’s income.
Often referred to as a “Fresh Start Bankruptcy”, a Chapter 7 bankruptcy permits a debtor to wipe the slate clean of his unsecured debts and get a “fresh start”. One thing to look at to see if you can file under Chapter 7 is whether your income is below your state’s “median income.”
The median income test is an obstacle placed in the path of a potential debtor by the credit card industry and its lobbyists. If the debtor makes less than his state’s median income, then, generally speaking, he can file for Chapter 7 bankruptcy. If the debtor makes more than his state’s median income, then further inquiry must be made to find out if he can still qualify.
In Louisiana, the median income is as follows:
One Person: $33,001.00/year $2,750.00/month
Two Persons: $40,565.00/year $3,380.00/month
Three Persons: $48,596.00/year $4,050.00/month
Four Persons: $57,752.00/year $4,813.00/month
For each additional person in the household an additional $6,300.00 per year is added.
So what this means is if you are a single individual and make less than $33,001.00 then you will probably qualify to file under Chapter 7 without there being a presumption that you as a potential debtor are trying to abuse the bankruptcy process.
But what happens if you make more than your state’s median income? Do you have to file for Chapter 13?
Well, the answer is that all is not lost!
A further inquiry must be made to see if you would still qualify based upon other financial factors. A skilled consumer bankruptcy attorney such as those members of the
Bankruptcy Law Network can guide you through this often complex issue
of median income.
For an excellent in depth article on median income consider reading “Do I Qualify For Bankruptcy, Median Income Part 2 of 9” by attorney and Bankruptcy Law Network contributor, Andy Miofsky.
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Last modified: February 23, 2013