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New Median Family Income Numbers For Bankruptcy Effective November 1, 2010

By Kevin Gipson, New Orleans Bankruptcy Attorney

The new median family income numbers used for determining whether a debtor can file a Chapter 7 bankruptcy went into effect today, November 1, 2010.  The numbers are provided by the U.S. Census Bureau.

The means test was one of the major changes that occurred as part of Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) enacted in 2005.

If a debtor’s family income is below the median income for the state in which they reside, then the debtor qualifies to file a Chapter 7 without having to complete a very complicated multi-page form known as Form B22A.

If the family income is above the median income for the state, then the debtor must determine whether monthly expenses, such as withholding taxes and mortgage payments, bring the debtor  below the amounts necessary to require a Chapter 13 filing.

The current state income numbers can be found on the U.S. Trustee website.

As an example, in Louisiana, where I practice, the median family income is as follows:

Single Wage Earner:      $37,493.00

Family of Two:                $45,950.00

Family of Three:             $54,800.00

Family of Four:               $66,154.00

For a family of more than four, an additional $7,500.00 per person is added.

Even though a debtor may qualify to file a Chapter 7, income is only one of many other factors that need to be considered when determining whether to file a Chapter 7 or a 13.

Many times a debtor may qualify to file for a Chapter 7, but they are behind on a secured debt such as a house note or a car note.  Under such a circumstance, the debtor might want to consider a Chapter 13.

Other times, the debtor may have non-exempt assets that he would lose in a Chapter 7 and will need to file a Chapter 13 to keep those assets.

An experienced bankruptcy attorney can help you to determine whether you should file, and if you should file, what chapter is best suited for your particular situation.

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Full post as published by Bankruptcy Law Network on November 01, 2010 (boomark / email).