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Bankruptcy Means Test Median Income Figures to Change on November 1

The United States Census Bureau recently published new statistics on the median income for individuals and families in each of the 50 states, plus the District of Columbia.  On November 1, 2014, the median income numbers that you must use when filing for bankruptcy will reflect the recent Census Bureau changes.

Why Does the State Median Income Matter in Bankruptcy?

The median income amounts for each state play an important role in bankruptcy – they determine whether a person filing for Chapter 7 bankruptcy has to pass the means test, or not.  The means test looks at your income and expenses and determines if you can repay a certain amount to your creditors. If you can, you cannot file for Chapter 7 bankruptcy and instead must file for Chapter 13. (Learn more about how the bankruptcy means test works.)

However, if your income is lower than the median income for your family size in your state, you don’t have to take the means test at all – you automatically qualify for Chapter 7 bankruptcy (assuming you meet other Chapter 7 eligibility criteria).

The Median Income Chart for Bankruptcy

On the U.S. Trustee’s website, you can find a chart listing the median incomes in each state for individuals, families of two, families of three,  and families of four (if your family is large than four, you simply add another $8,100 per person to the 4-person figure). Use the figure that corresponds to your family size.

If you file for bankruptcy on or after November 1, 2014, you will use the figures based on the new Census Bureau statistics.  You can find those numbers here:  http://www.justice.gov/ust/eo/bapcpa/20141101/bci_data/median_income_table.htm.

State Median Income Figures Change for Bankruptcy Means Test

On April 1, 2013, the state median income figures for the bankruptcy means test were adjusted.  In most states, the new figures make it slightly more easy for people to qualify for Chapter 7 bankruptcy.

What Is the Means Test?

In order to qualify for Chapter 7 bankruptcy, your income must be below the median income for your state or, you must pass the bankruptcy “means test” (a series of calculations based on your income and certain expenses designed to determine if you could realistically fund a Chapter 13 repayment plan.)

For details on how the means test works and the role it plays in both Chapter 7 and Chapter 13 bankruptcy, visit Nolo’s Bankrutpcy Means Test area.

State Median Income Figures Adjusted April 1, 2013

On April 1, 2013, new state median income figures were released. In most states, (California being a notable exception), the state median income increased — often by a thousand dollars or so per year.  This means that you can earn slightly more money, and still qualify for Chapter 7 bankruptcy without having to take the means test.

You can find the state median income figures here:  http://www.justice.gov/ust/eo/bapcpa/20130401/bci_data/median_income_table.htm