Bankruptcy and the State-To-State "Median Income" Requirements
Over time, the U.
S.
Census Bureau modifies the "median income" ("MI") amounts to accommodate for inflation and other increases in expenses.
The "MI" is determined based on analyzing several factors, including but not limited to, a specific geographic location, what others earn in that state, and most importantly-a household size, including dependents.
Why is it so important for the median income to increase for bankruptcy purposes in New York? Essentially, it allows for the bankruptcy process to be less complex.
When a debtor files for a Chapter 7, so long as he/she has annual earnings that amount to or is less than the MI in the specific geographic location, it avoids having to satisfy the complicated "Means Test.
" What is the "Means Test?" The "Means Test" essentially requires that a debtor justify why he/she isn't able to pay debts as they become due-while earning above-median income.
In reality, although one may earn more than the MI in their specific geographic location, it's not reasonable to logically infer that the excess income is readily available at the debtor's disposal.
Instead, some debtors have expenses that other debtors don't which may help justify why they earn above-median income, and yet, are unable to satisfy their creditors.
It's essentially a test to weed out those debtors who have enough "disposable income" at the end of every month to pay their creditors pursuant to a Chapter 13 Plan.
What About Spouses with Joint Income? If you are married, your income will be combined with your spouse's to determine the median-income threshold.
It can help when determining which exemptions are favorable to your household, which essentially determines which property debtors' will retain post bankruptcy.
Updated Median Income Requirements for New York Below is a layout that reflects the amended "median income" requirements and the percentage in change effective as of today.
Every state outside of New York has their own MI which should be considered when contemplating on filing a bankruptcy petition.
The updated New York Census Median Income effective as of 03/15/2011: 1 Person: $46,295 per year Additional dependent(s) per household: Add $7,500 per each dependent Essentially if your annual earnings are less than the "median income," then it will be less complex to file your bankruptcy petition.
However, if your income is above the median, then it will require that we plan your bankruptcy accordingly to satisfy the "Means Test.
" Planning is a key factor for anyone considering filing for bankruptcy protection, and that holds true for whether you're considering a Chapter 7, 13, or 11 petition.
S.
Census Bureau modifies the "median income" ("MI") amounts to accommodate for inflation and other increases in expenses.
The "MI" is determined based on analyzing several factors, including but not limited to, a specific geographic location, what others earn in that state, and most importantly-a household size, including dependents.
Why is it so important for the median income to increase for bankruptcy purposes in New York? Essentially, it allows for the bankruptcy process to be less complex.
When a debtor files for a Chapter 7, so long as he/she has annual earnings that amount to or is less than the MI in the specific geographic location, it avoids having to satisfy the complicated "Means Test.
" What is the "Means Test?" The "Means Test" essentially requires that a debtor justify why he/she isn't able to pay debts as they become due-while earning above-median income.
In reality, although one may earn more than the MI in their specific geographic location, it's not reasonable to logically infer that the excess income is readily available at the debtor's disposal.
Instead, some debtors have expenses that other debtors don't which may help justify why they earn above-median income, and yet, are unable to satisfy their creditors.
It's essentially a test to weed out those debtors who have enough "disposable income" at the end of every month to pay their creditors pursuant to a Chapter 13 Plan.
What About Spouses with Joint Income? If you are married, your income will be combined with your spouse's to determine the median-income threshold.
It can help when determining which exemptions are favorable to your household, which essentially determines which property debtors' will retain post bankruptcy.
Updated Median Income Requirements for New York Below is a layout that reflects the amended "median income" requirements and the percentage in change effective as of today.
Every state outside of New York has their own MI which should be considered when contemplating on filing a bankruptcy petition.
The updated New York Census Median Income effective as of 03/15/2011: 1 Person: $46,295 per year Additional dependent(s) per household: Add $7,500 per each dependent Essentially if your annual earnings are less than the "median income," then it will be less complex to file your bankruptcy petition.
However, if your income is above the median, then it will require that we plan your bankruptcy accordingly to satisfy the "Means Test.
" Planning is a key factor for anyone considering filing for bankruptcy protection, and that holds true for whether you're considering a Chapter 7, 13, or 11 petition.
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