December 15, 2019

The Date You File Your Bankruptcy Case Can Have Important Consequences

Your decision about when to file your Chapter 7 or Chapter 13 bankruptcy case can have important and far reaching consequences with regard to the bankruptcy relief you obtain.  Here are some considerations about which you should be aware:

Semi-annual Changes in the U.S. Trustee published median income numbers.  Your gross household income impacts whether you can file a Chapter 7, and whether your Chapter 13 must extend three or five years.  Since the October, 2007 enactment of BAPCPA, the U.S. Trustee has published new median income figures approximately every six months.   The last update was effective February 1, 2007 and the next expected update is scheduled for October 1, 2007.   When the median income figures are adjusted on October 1, 2007 the median income numbers will go up.  To give you an idea about how much they might go up, here is how the figures for the median income in Georgia for a family of 4 have adjusted since October, 2007:

  • October 17, 2007 – February 12, 2006 – $58,060
  • February 13, 2006 – September 30, 2006 – $60,028
  • October 1, 2006 – January 31, 2007 – $64,427
  • February 1, 2007 – present – $66,508

Assuming that the figures adjust again in October, 2007, we might be looking at $68,000 to $70,000.  If your household income is close to these limits, it would make sense to wait.

Similarly, the approved expense figures for your county may also adjust.  Since just about every debtor will benefit from applying the expected October, 2007 numbers I am encouraging any client who can wait to do so.

Changes to Your Family Size.  If you are pregnant, you should try to wait until after your child is born.  An Oregon bankruptcy judge recently ruled that an unborn child cannot be counted for purposes of determining family size for your median family income.  The difference in the median income for a family of 3 as opposed to a family of 4 can be significant.  For example, currently in Georgia, the median family income for a family of 4 is $66,508.  The median income for a family of 3 is $55,293.  While you could amend your means test after your baby is born, you will likely incur additional legal fees and a lot of unnecessary stress.

Expected changes in your employment.  The median income/means test looks at the past six months to determine your "ability to pay."  However, if your trailing six month average does not paint a realistic picture of your capacity to pay, your case is still subject to dismissal if your budget shows disposable income.

Bankruptcy assumes stability.  If your income is going up and down, you can expect the trustee and creditors to assume that you have the capacity to earn at the highest level of your past earnings even if that is not realistic.  Whenever possible file your bankruptcy case when your income situation is stable and likely to remain stable.

Do you have any additions for this list.  Send me an email or comment on this blog post.

About Jonathan

Jonathan Ginsberg represents honest, hardworking men and women in the Atlanta area who need personal bankruptcy protection. In practice for over 25 years, Jonathan teaches bankruptcy law and practice at legal continuing education seminars and he is a founding member of the Bankruptcy Law Network. Jonathan lives with his wife and children in Atlanta.

Page optimized by WP Minify WordPress Plugin