One of the most important reasons why bankruptcy filers need to consider consulting with a qualified bankruptcy attorney before filing their petition are the dreaded “Means Test” and “Median Income.”
It seems simple enough–look at the table, find your state and number of family members and then write down your income and move on to the next form. But watch out filers–there are subtle differences among various sources of income.
For example, where does your alimony go? Are veterans benefits considered income? What if only one spouse is filing? What if both spouses are filing, but intend to separate or divorce during the bankruptcy. What if the debts are some business and some consumer?
Calculating your median income is a critical part of filing, and where your family falls in relation to the median income of your state will determine whether you will be able to file a Chapter 7 bankruptcy, or if you will have to file a Chapter 13.
Georgia’s median income for cases filed after March 15, 2009 is as follows:
1 person household $40,760
2 person household $54, 054
3 person household $61,959
4 person household $71,554
add $6,900 for each additional family member
If your family’s income is under the number corresponding to the number of family members, you are considered under the state’s median income and you will be presumed to not be abusing the process of filing a Chapter 7 bankruptcy.
If your family’s income is above the number, you may have to file a Chapter 13. But it is important that you consult with a bankruptcy attorney who can ensure that you have calculated your income correctly–and explain the differences between Chapter 7 and 13.