The United States Trustee has released revised median income figures for Georgia households. These new figures will apply to Chapter 7 and Chapter 13 cases filed after November 1. The revised figures continue the trend of lower household income amounts meaning that it will be more difficult to avoid a “presumption of abuse” in Chapter 7 filings. Presumably the new numbers reflect lower household income figures associated with the current recession.
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As you probably know, your eligibility for bankruptcy protection is determined in part by your household income. The Bankruptcy Code requires us to calculate your median income by looking at gross income earned by you, your spouse and any other working member of your household during the 6 months preceding the current month. We add up all the income and divide by 6 to arrive at a number. We then compare than number to a median income table provided to us by the Census Bureau and the United States Trustee’s office. This calculation is called the “median income test.”
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For the first time since means testing was instituted in 2005, the median income number in Georgia have gone down. This means that potential Chapter 7 debtors will have a more difficult time avoiding a “presumption of abuse” and the extra cost and hassle of means test calculations.
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I am not going to promise you that you are going to be able to follow this, but the folks at Nolo have released a free on-line means test program. I find this calculator more complex than the means test calculator built in to BestCase – the petition preparation program that I use. The BestCase program draws data from other fields that you fill out anyway – like mortgages and car payments, whereas the Nolo program is a stand alone and requires manual data entry.
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Personal bankruptcy is made for “what if” scenarios. What if I file individually instead of jointly with my wife? What if I quit my job while I am in the middle of my Chapter 13? What if I need a replacement vehicle after I file?
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I have written a lot on this blog about the median income test and the means test. Each of these pre-filing calculations turn on both your household income as well as your family size.
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When I meet with a potential client, one of the first calculations I run is a “median income test” evaluation. The median income test adds up your gross income from all sources during the six months preceding the month of filing, then divides by six to arrive at a monthly average. If that monthly average exceeds the median income for a similarly sized family in Georgia (or other applicable State), then you “fail” the median income test and a “presumption of abuse” arises. As a practical matter, above-median debtors often find themselves in a Chapter 13 repayment plan rather than a Chapter 7 liquidation.
More on How are Year End Bonuses Treated in a Median Income Test Calculation?
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This morning, I received an email from a gentleman named Jim, who writes:
How can I file chapter 7 by myself without paying someone, anyone $ 99.00 $199.00, $299.00 etc… Three different people( with a financial intrest of course) said representation is required.
Here is my response: Jim, you certainly have the right to file a Chapter 7 case by yourself. The forms are available either on-line or at an office supply store. There are also several books about how to do this. I am currently reviewing a book entitled The Complete Chapter 7 Personal Bankruptcy Guide
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If you read this blog and other consumer bankruptcy blogs like Scott Riddle’s Georgia Bankruptcy blog or the Bankruptcy Law Network blog, you know that preparing for filing a case involves a great deal of effort on your part to collect information and documents. Are there any steps that you as the potential bankruptcy debtor can take to speed up the process and to keep costs down.
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The United States Trustee has released the new median income table for Georgia debtors, applicable to cases filed February 1, 2008 and thereafter:
More on New Median Income Numbers for Georgia Bankruptcy Filers on February 1, 2008
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