by Craig D. Robins, Esq.
New Bankruptcy Means Test Criteria Going Into Effect November 1, 2011 Will Make It Harder for Some New York Consumers to Qualify for Chapter 7
The state median income figures that you need to use for the means test change periodically. The last change was on March 15, 2011, and the change before that went into effect exactly a year before that, on March 15, 2010. The change before that was November 1, 2009.
The means test median income figures usually change twice a year — in March and November.
The changes earlier this year in March 2011 actually made it slightly easier to qualify. However, the changes going into effect next month will make it slightly harder for most Long Island and New York consumers.
In order to automatically pass the bankruptcy means test your income must be less than the median income in the state where you live. For New York residents, it will be slightly harder for some families to qualify for Chapter 7 bankruptcy than earlier in the year.
New Median Family Income Figures for New York Effective Nov. 1, 2011
(Effective for cases filed after 1/01/11)
Family Size Amount
Add $7,500 for each individual in excess of 4.
New, New York Means Test Figures Compared to Current Means Test Figures
Family Size of One: If you are a single individual, which means that you have a “family size of one”, the New York median income has decreased, from $46,295 earlier this year to $45,931. This is a minor change of $364 per year, or about $30 per month.
Family Size of Two: For a family size of two, the new median income figure has decreased, from $57,777 earlier this year, to $56,113. This is a significant change of $1,664 per year, or about $139 per month.
Family Size of Three: For a family size of three, the new median income figure has decreased, from $68,396 earlier this year, to $66,953. This is a significant change of $1,443 per year, or about $120 per month.
Family Size of Four: For a family size of four, the new median income figure has decreased, from $83,942 earlier this year, to $81,212. This is a very significant change of $2,730 per year, or about $228 per month.
Why Bankruptcy Means Test Figures Routinely Change
The figures used for the each state’s median income are based on United States Census data, and adopted by the Office of the United States Trustee. These figures routinely change once or twice a year. Pursuant to 11 U.S.C. § 101(39A)(B), the means test median income data is regularly adjusted, based upon the Consumer Price Index (CPI) for All Urban Consumers.
Usually, income rises each and every year because of inflation, the cost of living, etc. When we were deep into the recession 18 months ago, income actually decreased slightly from the prior year. That resulted in lower median income figures which made it more difficult to qualify for Chapter 7. Although there was a little bit of inflation after that, we have since gone through another round of deflation.
It appears that we may not be heading out of the recession so fast, as median family income has decreased over the past six months. Accordingly, debtors will suffer.
Links to Official U.S. Trustee Sites Containing Means Test Data Charts
To see the CURRENT DATA STILL IN EFFECT UNTIL OCTOBER 31, 2011 of new median income data going into effect next week, go to Income Means Test Chart for cases filed beginning March 15, 2011 .
To see the NEW DATA THAT WILL GO INTO EFFECT ON NOVEMBER 1, 2011 of new median income data going into effect next month, go to Income Means Test Chart for cases filed beginning November 1, 2011 .
To see the very old and now very obsolete median income data for each of the 50 states, go to the U.S. Trustee Census Bureau Median Income Means Test Chart for cases filed between November 1, 2009 to March 14, 2010 .
To see the old data from last year of median income data for each state, which is only good through the end of this week, go to Median Income Means Test Chart for cases filed between March 15, 2010 and October 31, 2010 .
To see the old data from earlier this year of median income data for each state, which is only good through the end of next week, go to Median Income Means Test Chart for cases filed between November 1, 2010 and March 14, 2011 .
The Bankruptcy Means Test
This is a comprehensive, very complex series of calculations that the federal government designed to ascertain whether someone qualifies for Chapter 7 filing.
Under the old bankruptcy law, almost anyone could seek to eliminate their debts by filing Chapter 7. The new laws changed that. Click here to take a look at the actual Means Test form .
The Means Test formula is designed to evaluate whether a debtor has the financial means to pay back a substantial portion of his or her debts. If the person does, then he or she may not be eligible to file Chapter 7 bankruptcy , and may instead have to file a payment plan bankruptcy under Chapter 13 .
If debtor’s income is below the New York State median income for a family of that particular size, then passing the Means Test is virtually automatic. If not, the debtor must have a sufficient amount of acceptable deductions permitted by the Means Test.
Impact of New Means Test Figures on Consumers Filing Bankruptcy on Long Island
In my Long Island bankruptcy law practice, I estimate that at least 9 out of 10 clients now seeking to file for Chapter 7 bankruptcy relief do indeed qualify under the means test.
Making the most of qualifying under the means test and making the figures work for you requires that you meet with an experienced Long Island bankruptcy attorney to ascertain eligibility for filing for bankruptcy relief.
There Are Many Other Posts About Means Test Issues on this Blog
I’ve written several dozen articles on various issues concerning the bankruptcy means test. You can see them by clicking the category, Bankruptcy Means Test .
Here are some of the more popular posts: