14 Oct Median Income Level for Bankruptcy Increases on October 15th.
To qualify to file a Chapter 7 Bankruptcy as a consumer, you must first look at your annual income in comparison with the “median income” of your state. There is a chart available, published by the US Trustee’s Office, to determine what those levels are, broken apart by state and size of household. These levels will go up on October 15, 2007 allowing more consumers to qualify for a Chapter 7 Bankruptcy without the necessity of the means test.
First of all, you need to know that the dollar amounts in the chart are based on gross income, and generally include anything coming into your household. Although a quick look will give you an idea, the formula to figure out whether you are above or below the appropriate level is complicated. You must calculate first what is included and then annualize the average of the last six month’s of income.
The really interesting thing about these standards is how little sense they make, over all. For example, in California, the difference between households of two or three people is $4,306, but if you add a fourth person, it goes up by $10,892. And in every state the median is significantly higher for two people than one, but in Puerto Rico or the Northern Mariana Islands, there is no difference! I guess in those places two really can live as cheaply as one.
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