The United States Trustee published “means test” numbers as of November 1, 2010. The “means test” began in 2005 when bankruptcy law changed. Start with median income levels for family sizes. It uses information from the Census Bureau and data from the IRS. It is an attempt to create a mathematical formula to determine whether a bankruptcy filer is a candidate for Chapter 7 or Chapter 13. Based on these numbers, the means test became more cruel.

Family size Median income through October 31 Median income after November 1 Change

Household of 1: $41,875

Household of 2: $49,919

Household of 3: $59,190

Household of 4: $70,600

For family sizes of 5 or more, add $7,500 for each additional person.

I guess the lower income levels are due to the recession and reduced income for families here in Michigan. Those most affected would likely be a married couple with no children. If a husband and wife earn $12.50 an hour and work full time, they would be above the median earnings number.

All is not lost though, taxpayers who fail to break below the median income level have to complete the second part of the means test which analyzes the debtors’ budget using a fancy formula Congress came up with. As you can guess, for the most part it is detached from reality and does not always take into account your particular circumstances. We are very familiar with the means test, and assuming you want to file a Chapter 7, we can make sure it is completed correctly to maximize your chance of filing a 7.

If you are considering filing for Chapter 7 bankruptcy and are on the verge of the median income numbers for your household, you should consider filing before October 31, 2010. This does not give you much time. You have to gather a lot of financial documents, complete your credit counseling, and still give your attorney enough time to prepare a well-written petition.

For more information on bankruptcy, please take some time to visit my website at: Downdriver Bankruptcy.