Jacksonville Bankruptcy Lawyer Blog
Twice a year the United States Department of Justice releases new Median Family income figures for each state. These figures are used to calculate a debtor’s eligibility to file for bankruptcy under Chapter 7 of the Bankruptcy Code. If your income is greater than the median(average) income for your state of residence and family size, the trustee may be obligated to dismiss your case.
if your income exceeds the median family income then a presumption arises under part (a) of the Means Test that you do not “qualify” for a Chapter 7 bankruptcy.
The Means Test calculation compares your average monthly income (as calculated over the last six (6) months) to the median family income in your state for a household of your size. If your average monthly income is lower than the median family income for your state of residence and family size, then you meet the means test and there is a presumption that you will be permitted to file for Chapter 7 relief. There are even a few exceptions to the means test for military families and those whose businesses failed.
If your income is greater than the median income for your state of residence and family size, you still might meet part (b) of the means test after taking into consideration certain expenses as defined by the Bankruptcy Code and other deductions, including regular charitable donations, school expenses, payments on 401(k)/IRA loans, and health insurance.
The Median Family Income for Florida as of November 1, 2011 was as follows:
Family size 1: $40,766 per year;
Family size 2: $49,729 per year;
Family size 3: $52,840 per year;
Family size 4: $62,742 per year.
You then add an additional $7,500 per year for each additional household member.
With the release of the new data from the DOJ and the Census Bureau, these figures went up approximately $2,000 per category per year on May 1, 2012.
The Median Family Income for Florida as of May 1, 2012 is as follows:
Family size 1: $42,053 per year;
Family size 2: $51,299 per year;
Family size 3: $54,508 per year;
Family size 4: $64,722 per year.
As mentioned earlier, filers can add an additional $7,500 per year for each additional household member above four.
If you find yourself needing the services of a bankruptcy attorney, please call us at (904) 685-1200.
Source: “Census Bureau, IRS Data and Administrative Expenses Multipliers,” published at Justice.gov.