U.S. Trustee updates the bankruptcy "Means Test'" Changes are reported by Eric Southward, a Houston, Texas Bankruptcy Lawyer

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The means test is an objective test based on uniform standards adopted by the U.S. Trustee's Office but then applied by attorneys, private trustees, and the courts to determine debtors ability to pay, according to Eric Southward, a Houston Bankruptcy Attorney.

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The law firm of Busby and Associates is pleased to announce that the United States Trustee’s Office released the updated Means Test numbers on 05/15/15. The means test is used in bankruptcy proceedings to help determine a consumer’s eligibility to file for Chapter 7 bankruptcy protection. It is also used in Chapter 13 bankruptcy to determine how much a consumer has to pay back to unsecured creditors.

The allowable living expenses include standard allowances for food, clothing and related services, housekeeping supplies, personal care products and services and a catchall miscellaneous section. The allowances did not change this year and remain $583 a month for a family of one, $1092 a month for a family of two and $1249 a month for a family of three. As the family size increases so do the allowances. For a family of four, the allowance is $1482 a month and for a family of five, it is $1780 a month.

The new median income information was also released for the State of Texas. According to the United States Trustee’s Office, the median income went up across the board for all family sizes. The median income is used to determine the length of a payment plan in a Chapter 13 bankruptcy. A consumer whose income is over the median income will be required to propose a minimum five year plan. A consumer with an annual income less than the median will be allowed to propose a Chapter 13 bankruptcy payment plan that runs from three years up to five years.

For the State of Texas, the median income for one person is $42,908. This is an increase from last year of $42,223. For a family of two, the median income rose to $55,666 versus $57,730 for last year. For a family of three, the median income is now $61,502. This represents a slight increase from the median last year of $60,520. A family of four saw its median income rise to $71,973. This is up from last year’s median of $79,824. Finally, a family of five saw the median income increase to over $80,000 this year. The median income is now $80,073 which is up from last year’s median income of $78,924.

For some consumer in Texas that are contemplating filing bankruptcy, the new higher median income numbers could make a difference between qualifying for Chapter 7 bankruptcy or having to pay a portion of their debt back in a Chapter 13 bankruptcy. Busby & Associates provides a means test calculator, for Houston based families, to self test qualifications.

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Eric Southward
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The Law Office of Busby & Associates
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