The U.S. Department of Justice has announced the new State Median Incomes to be used with the Bankruptcy Means test. This figure is based on the size of your family and where you live. In general, if your family is below the median, you would qualify for Chapter 7, and if you are above the median, you would have to complete the bankruptcy “Means Test” to determine if you qualify. The Means Test also determines how much you would have to pay to your creditors in a Chapter 13 (debt repayment plan) case.
In Illinois and Wisconsin at least, since the last time the figures were updated, the median incomes went up by about $1000.00 per year, for each family size. Take a look at the official US Trustee link for all the states.
Here are the new figures for Illinois and Wisconsin:
Size of household: 1 2 3 4
Illinois $48,232 $62,150 $71,040 $82,876
Wisconsin $44,802 $58,751 $68,801 $81,373
In either state, for more than 4 people, add $8,100 for each extra person.
The rising numbers mean not only that families are earning more now, but it can also help people who need to file for Bankruptcy protection. It will allow more people to qualify for bankruptcy relief, because if your family was just over the median before, but didn’t qualify for Chapter 7, your family might qualify after April 1st. For some of my clients, it might just make the difference, enough to wait to file the case a few weeks later.
The Means test is used to first determine whether you can eliminate all of your unsecured debts in Chapter 7, or whether you have to pay them back in Chapter 13 Bankruptcy. And, if you do have to file Chapter 13, the test determines how much, what percentage of your bills you have to pay. That is why it is so important to have an attorney who has done many means test calculations to prepare your case. There are many important strategies that can be used to help you get the best possible means test result.
It is important to discuss your whole situation with an experienced bankruptcy attorney to see what the new means test figures mean for you and your family.
Daniel J. Winter
BankruptcyLawChicago.com
312-789-9999
Offices in Chicago, Gurnee, Oak Lawn, and Skokie, Illinois.
Serving people in Northern Illinois and Southern Wisconsin
