Chapter 7 Bankruptcy Petitioners to Face Greater Obstacles in Some States on October 1
New median income figures taking effect on October 1 may exclude some people currently eligible for Chapter 7 bankruptcy. Those filing for Chapter 7 bankruptcy must qualify under the Chapter 7 “means test”, a test that begins by comparing the petitioner’s income to the median income for his state and family size. The median income for at least one family size has declined in 39 states, making it tougher--or even impossible--for some people in those states to qualify for Chapter 7 bankruptcy. While some of these declines have been small, others are dramatic and will have widespread impact. For instance, two-person households filing for Chapter 7 bankruptcy protection in Washington, D.C. will be screened using a number that is more than $10,000 lower than the one currently being applied. A list of affected states and family size categories is available at www.TotalBankruptcy.com.
(PRWEB) September 15, 2006 -- The overall median income in the United States has increased slightly, according to the U.S. Census Bureau, but that’s likely small comfort to the individuals and families impacted by the declines in 39 states. Families already suffering from declining income in many areas may now face another financial obstacle: greater hurdles to filing for Chapter 7 bankruptcy protection.
Eligibility for Chapter 7 bankruptcy depends on a two-part “means test”. The means test is intended to screen out people who have sufficient income to pay their creditors, and the first step in the test is to compare the debtor’s income to the median income for his state and family size.
In some areas, where the median income has declined very slightly, a small number of potential Chapter 7 filers will be impacted. But many Washington, D.C. bankruptcy petitioners can expect greater obstacles to filing under Chapter 7, and many may be disqualified outright. That’s because the median income in Washington, D.C. declined by more than $4,000 for a single wage earner, and more than $10,000 for a family of two.
Although the District of Columbia was the most dramatically impacted, several states posted decreases of thousands of dollars in one or more categories.
As of October 1:
--Connecticut bankruptcy petitioners with one and three person households will be subjected to means testing using median incomes about $2,500 lower than those currently in use.
--Idaho bankruptcy petitioners in four person households will face calculations based on a median income more than $5,000 lower than the present figure.
--New Hampshire bankruptcy trustees will apply median income figures that have declined by as much as $6,512, depending upon family size.
Overall, more than 90 state/family size categories have seen a decline in median income. The impact of those changes will vary dependent on a number of factors, but one thing is certain: many Chapter 7 bankruptcy petitioners in the affected states will face greater obstacles to filing Chapter 7 bankruptcy. For some, it may only mean going on to the next phase of the means test and demonstrating a lack of disposable income, but for others it will mean that Chapter 7 bankruptcy is not an option so long as these new numbers are in effect.
Consumers considering Chapter 7 bankruptcy can visit Chapter 7 median income changes. Anyone considering Chapter 7 bankruptcy in an affected state should speak with a local bankruptcy attorney right away, to ensure that the October 1 changes don’t cut off the opportunity for relief under Chapter 7.
###
Post Comment:
Trackback URL: http://www.prweb.com/pingpr.php/VGhpci1QaWdnLVN1bW0tWmV0YS1JbnNlLVplcm8=
Bookmark -
Del.icio.us |
Furl It |
Technorati |
Ask |
MyWeb |
Propeller |
Live Bookmarks |
Newsvine |
TailRank |
Reddit |
Slashdot |
Digg |
Stumbleupon |
Google Bookmarks |
Sphere |
Blink It |
Spurl
|
