Two Different Levels of Information Required to File Bankruptcy: Are You Above or Below Median?

19 Feb Two Different Levels of Information Required to File Bankruptcy: Are You Above or Below Median?

There are two different levels of financial information required to file bankruptcy under chapter 7 or chapter 13. If you’re lucky (at least from a bankruptcy perspective), your annual household income, for a household of your size, is below your state’s median annual income.

If so, your lawyer will need significantly less information from you than if your annual income is above the median annual income. In either case, the information can usually be gathered in one evening, so don’t despair; it’s just that below-median debtors get a break.

If your annual income is below the median, here’s what you need to give your bankruptcy lawyer:

  • the last six months paycheck stubs (“payment advices”);
  • a copy of your most recent federal income tax return (every single page of it);
  • all the other information required for the bankruptcy papers.

If your annual income is above the median, the requirements are more extensive:

  • the last six months paycheck stubs;
  • a copy of your most recent federal income tax return;
  • vehicle loan: the exact monthly payment, payoff balance, interest rate, and number of payments remaining;
  • mortgage: the exact monthly payment, payoff balance, and how many years of payments are remaining;
  • if not escrowed with your mortgage, the average monthly payment for property taxes and insurance;
  • other secured debts: the exact monthly payment, payoff balance, interest rate, and number of payments remaining;
  • if behind on mortgage, vehicle, or other secured debt payments, the exact amount needed to become current;
  • all the other information required for the bankruptcy papers.

The information requirements listed above for above-median debtors is not required for below-median debtors. This is because below-median debtors do not need to complete the entire means test form; they only need to complete the portion of the form establishing that their income is below the median, usually by using nothing but paycheck stubs. This means that below-median debtors and their lawyers have less information to gather in preparing the means test form when filing a chapter 7 or 13 bankruptcy.

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Craig W. Andresen is a consumer bankruptcy lawyer in Bloomington, Minnesota, with 22 years’ experience in consumer and small business bankruptcy cases. He is the Minnesota chair of the National Association of Consumer Bankruptcy Attorneys, and is a member of the Minnesota State Bar Association’s Bankruptcy Section. Mr. Andresen lectures often on the topic of consumer bankruptcy at local and national legal seminars.
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