Are you wondering if you are eligible to file Chapter 7 Bankruptcy? Find out below.
In 2005, the Bankruptcy Abuse and Consumer Protection Act of 2005 (“BAPCA”) passed. Potential bankruptcy debtors now have to pass a “means test” to be eligible to file for Chapter 7 Bankruptcy. If you are wondering if you are eligible to file Chapter 7 Bankruptcy – read on.
The Means Test
The bankruptcy means test determines whether you have the means, or the disposable income to pay back other creditors. The idea is to keep folks with high income (based on household size) from filing Chapter 7 bankruptcy. These high income households with disposable monthly income may not file a Chapter 7 – but can file a Chapter 13 and potentially pay back some of their debts.
Median Family Income?
The original source for the State Median Family Income is the Census Bureau. The US Department of Justice regularly updates the Census Bureau’s Median Family Income Data and is accessible through this page. The Median Family Income varies by location. For zip code 66044 (Lawrence, Kansas) a household size of 2 is 60,634.00/year, or a monthly income $5,053.
How to Calculate Your Family Income
To calculate your family income, you need to take all your income over the last 6 months and compare it to the median income for a household of your size. If your income is less then you are presumed to pass and are eligible to file chapter 7 bankruptcy. An online calculator can be found here. You can also speak with an attorney and they can calculate it for you.
What If You Are Above Median?
If you are above the median you may still be eligible to file chapter 7 bankruptcy, but you must complete the rest of the means test. The means test can be extremely complicated so it is recommended you speak to an attorney if you are above median.
If you have questions about whether you are eligible to file Chapter 7 bankruptcy, please give us a call at email us now. Chris W. Steffens is a Kansas Licensed Bankruptcy Lawyerfor a FREE Consultation over the phone, in person or you can