Will You Qualify For Chapter 7 Bankruptcy After Halloween?

10 Oct Will You Qualify For Chapter 7 Bankruptcy After Halloween?

If you are a consumer thinking about filing bankruptcy, you will want to figure out whether to file bankruptcy before or after November 1 when changes to the income eligibility guidelines take effect. For some people, the means test changes will help and for others the changes will hurt.

In Kansas, for example, median family income for families of one to three goes up while median family income for four or more person families decreases. In Florida, median family income went down for all family sizes. In Georgia, the numbers went down except for families of two.

The new income figures have been released so you have 21 days until October 31, 2009, to file bankruptcy, if you will be hurt by the new means test guidelines. See your consumer bankruptcy attorney to learn your options.

Congress created an income test for determining eligibility for consumer bankruptcy in the law reform of 2005. The thought was that you should only get as much bankruptcy relief as you need. Creditors complained that people were discharging all their debt in chapter 7 bankruptcy who had the ability to make partial payment in chapter 13 bankruptcy.

A math test was created to determine who can file chapter 7, who must file chapter 13, and how much debt has to be repaid in chapter 13. This test is called the means test. It starts with the median family income for your family size in your state according to data compiled by the U.S. Census Bureau and adjusted by the U.S. Trustee Program. The median income figures are changing for bankruptcy cases filed on or after November 1, 2009.

If your income is less than the family median income for your state, you pass the means test and are eligible for filing either chapter 7 or chapter 13 bankruptcy.

If your income is higher than the family median income for your state, then you keep going by filling out about six pages of information about your expenses and various deductions you are allowed to take to determine if you have disposable income to pay your unsecured creditors (the ones without collateral such as credit cards and medical bills). You could pass the means test at the end of the process if you have no disposable income and qualify for either chapter 7 or chapter 13 bankruptcy. You could even qualify for nominal repayment to general unsecured debts in chapter 13 bankruptcy. Or, if you have disposable income, you may be eligible for a chapter 13 payment plan bankruptcy.

The means test is very complicated. The devil is in the details, as they say, and your consumer bankruptcy attorney can help you determine your options.

Census Bureau Median Family Income By Family Size

(Cases Filed On and After November 1, 2009)

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

The State 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 $38,415 $48,075 $55,631 $65,311
Alaska $52,130 $74,073 $77,544 $85,422
Arizona $42,628 $56,894 $62,066 $69,452
Arkansas $33,531 $44,415 $48,721 $57,905
California $48,140 $64,878 $70,890 $79,477
Colorado $47,253 $64,985 $69,977 $81,644
Connecticut $58,529 $72,586 $86,643 $102,124
Delaware $46,414 $60,953 $70,075 $88,725
District of Columbia $42,270 $68,892 $69,294 $69,294
Florida $41,226 $52,259 $58,574 $69,009
Georgia $40,691 $55,258 $61,104 $68,502
Hawaii $55,418 $67,199 $77,539 $91,483
Idaho $39,625 $51,474 $52,765 $62,051
Illinois $46,105 $60,052 $71,329 $81,465
Indiana $40,828 $52,554 $59,650 $70,873
Iowa $40,061 $55,284 $64,372 $72,961
Kansas $41,357 $57,767 $63,438 $72,610
Kentucky $37,584 $45,653 $54,683 $64,459
Louisiana $37,464 $48,287 $53,461 $66,256
Maine $38,812 $50,912 $62,076 $70,374
Maryland $55,238 $73,061 $85,455 $101,803
Massachusetts $53,505 $69,451 $82,591 $99,648
Michigan $43,611 $52,620 $61,737 $74,824
Minnesota $45,262 $62,384 $75,073 $86,637
Mississippi $32,068 $42,758 $46,685 $58,518
Missouri $39,645 $51,568 $60,371 $71,059
Montana $40,122 $52,497 $58,636 $65,827
Nebraska $40,352 $56,861 $63,702 $72,542
Nevada $46,316 $60,449 $67,052 $71,104
New Hampshire $51,515 $64,204 $79,668 $93,926
New Jersey $60,026 $72,000 $86,070 $103,261
New Mexico $36,773 $50,637 $50,637 $55,561
New York $46,485 $58,109 $69,421 $82,457
North Carolina $38,794 $52,194 $56,930 $67,295
North Dakota $36,884 $54,662 $62,635 $75,140
Ohio $41,873 $52,216 $61,772 $73,301
Oklahoma $39,068 $50,891 $54,522 $62,037
Oregon $42,495 $56,019 $62,832 $72,667
Pennsylvania $44,555 $53,763 $67,757 $77,867
Rhode Island $45,222 $62,806 $76,846 $87,002
South Carolina $39,191 $51,374 $55,296 $65,655
South Dakota $36,844 $54,331 $63,153 $70,182
Tennessee $37,732 $49,110 $54,014 $64,228
Texas $38,940 $55,859 $59,222 $66,381
Utah $50,568 $56,932 $61,905 $69,990
Vermont $41,742 $56,858 $65,326 $74,163
Virginia $48,362 $65,122 $74,151 $85,939
Washington $51,344 $64,158 $72,533 $82,716
West Virginia $39,275 $43,224 $51,836 $58,479
Wisconsin $42,356 $57,405 $68,123 $80,530
Wyoming $44,161 $59,830 $65,820 $76,964
* Add $6,900 for each individual in excess of 4.
COMMONWEALTH OR
U.S. TERRITORY
FAMILY SIZE
1 EARNER 2 PEOPLE 3 PEOPLE 4 PEOPLE *
Guam $36,019 $43,066 $49,076 $59,389
Northern Mariana Islands $24,187 $24,187 $28,141 $41,390
Puerto Rico $20,384 $20,384 $23,196 $27,532
Virgin Islands $28,577 $34,348 $36,621 $40,123
* Add $6,900 for each individual in excess of 4.

Last Update: October 5, 2009 5:48 PM
U.S. Trustee Program/Department of Justice
usdoj/ust/smm

 

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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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