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Bankruptcy Means Test Median Income Figures Changed

To file for Chapter 7 bankruptcy, you must fall within certain income guidelines. In California, you must earn less than the median state income for a household of your size. This is a key component to qualifying for Chapter 7, which may allow you to discharge certain debts. Filing for bankruptcy can provide a great deal of relief to you and your family. This process can allow you to move forward into a more stable financial future. However, before filing, you must first qualify under the income guidelines. As of November 1, 2014, the median incomes in California changed. So, if you file for bankruptcy after that date, you must make sure you meet the new eligibility standards.

New California Median Income

For the purposes of bankruptcy, the United States Census Bureau defines median income levels.

  • Self only: $49,185
  • Family of 2: $63,749
  • Family of 3: $67,817
  • Family of 4: $78,150

If you earn less than these amounts, dependent on your household size, you qualify for Chapter 7 bankruptcy. Otherwise, you will have to submit to a means test to show your eligibility. The means test determines whether an applicant qualifies for Chapter 7, based on their income and expenses. Your income and expenses will be important factors during your bankruptcy case. The means test involves a complex calculation to determine whether your financial circumstances allow you to file for Chapter 7. Some applicants may not be allowed to file for Chapter 7, and must instead file for Chapter 13 bankruptcy.

How These Changes Affect You

There are many ways the median income change could impact your bankruptcy case. Perhaps most importantly, these changes could affect whether you file for Chapter 7 or Chapter 13. With Chapter 7 bankruptcy, you can actually discharge certain debts. In a Chapter 13 case, you cannot discharge debts. Rather, your debt is reorganized, so that you can make manageable, monthly payments. Since the California median income changed on November 1, 2014, some applicants that previous qualified for Chapter 7 may no longer qualify. In some cases, a Chapter 7 applicant may have to complete a means test form, if they no longer automatically qualify. If that describes your situation, it may be beneficial to pursue Chapter 13 instead. Your bankruptcy lawyer can help you decide which is best for you and your family.

Bay Area Bankruptcy Firm Can Help

Are you concerned about how the median income change could impact your bankruptcy case? Do you have questions about your filing options, but are not sure which to choose? If so, contact the Law Offices of Melanie Tavare today. For years, Attorney Melanie Tavare has provided bankruptcy help to Bay Area residents. With extensive legal knowledge and experience, she can give her tailored, helpful advice about your case. You may unsure of your next steps, or whether bankruptcy is the best choice for you. Our legal team will guide you through your options. We understand this is an important decision, and we know what is at stake. Because of this, we are dedicated to helping you at every step. To learn more, contact us now at (510) 255-4646 and schedule a free consultation.

The Law Offices of Melanie Tavare are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.


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