New Means Test Numbers In Effect
Posted on May 2, 2012 in Bankruptcy, Bankruptcy procedures, Chapter 13, Chapter 7, Illinois, Wisconsin
You may recall some previous blog entries about the “Means Test”, the math calculation that Congress forced the bankruptcy courts to use to help determine who belongs in Chapter 7 and who belongs in Chapter 13 – and how much should be paid to creditors.
As of yesterday, the Means Test numbers have changed. You can see the new amounts here. Every few months, there are adjustments depending on the economy and how much families are making.
Let’s say you come in to our office in Waukegan and tell us that you are a single parent with one child and live in Lake County, Illinois. We’d look to the state of Illinois, see that the median income level for a household size of 2 is $59,794. If you then told us that you are salaried, your income is steady and you gross around $45,000 per year, you shouldn’t have any issues with the means test. We would still look at the facts and your budget (as well as any prior bankruptcies) to see if you should consider filing in Chapter 13, but the Means Test is not going to be a concern in preparing the bankruptcy filing.
Now, perhaps, you are a resident of Racine, Wisconsin. You and your spouse have two delightful children. You and your wife together earn roughly $100,000 per year. Well you make more than the median line and would have to complete part 2 of the means test. You still might qualify for Chapter 7, but it will be a tougher hurdle to overcome. We’d have to consider what this means for a Chapter 13 payment as well.
Like many laws, this Means Test is constantly adjusting. We can tell you what this means for your chances of filing, but we need to know what was earned in the last 6 months, and any changes that might be happening in the near future (loss of overtime, large bonuses). With this information, we can advise you properly.