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.
The bankruptcy means test determines whether you have the means, or the disposable income to pay back other creditors. The idea is to force folks with higher incomes into Chapter 13 so they can pay back some of their creditors. The means test makes the bankruptcy process more complex for lawyers and more expensive for debtors.
The Census Bureau is the original source for the State Median Family Income. The US Department of Justice updates the Census Bureau’s Median Family Income Data twice a year. It is accessible through this page. The Median Family Income varies by location. For zip code 66044 (Lawrence, Kansas) a household size of 2 is $72,442/year, or a gross monthly income $6,036.
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. A presumption arises that you qualify for chapter 7 bankruptcy if your income is below the median. You can find the online calculator here. You can also give us a call and we will calculate it for you.
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 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 785-727-7700 for a FREE Consultation over the phone, in person or you can email us now. Chris W. Steffens is a Kansas Licensed Bankruptcy Lawyer