Category — Means Test

Topeka Bankruptcy Judge Janice Miller Karlin announced last week that she is reversing course and will follow the Pearson decision to allow debtors a means test deduction for ownership of a car without a debt against it.

Judge Karlin had earlier disallowed the car ownership deduction in In re Law, 2008 WL 1867971 (Bankr. D. Kan. 2008), following the decision by Kansas District Court Judge John W. Lungstrum in Wieland v. Thomas, 382 B.R. 793 (D. Kan. March 4, 2008), reversing Judge Robert D. Berger of Kansas City, KS, in In re Thomas, 2007 WL 2903201 (Bankr. D. Kan. Oct. 02, 2007). [Read more →]

It will be a little easier to qualify for bankruptcy relief when the income guidelines used for eligibility increase slightly on October 1.  A single Kansas earner will be able to make $894 more per year and qualify for chapter 7 bankruptcy relief.  A family of four will be allowed a $2036 more income per year in Kansas.

Here are the "means test" figures now in effect and the figures expected to be approved by the U.S. Trustee for bankruptcy cases file on October 1, 2008, or after.

• 1 earner                       $38,594      $39,488
• 2-person families    $52,989      $54,070
• 3-person families    $58,075      $60,906
• 4-person families    $69.831      $71,867
• 5-person families    $76,731      $68,548
• 6-person families    $83,631      $63,075

These figures come from the U.S. Census Bureau for each state and family size.  They are recalculated annually and adjusted for changes in the consumer price index, then adopted by the U.S. Trustee for bankruptcy purposes.

Debtors filing a bankruptcy petition must fill out a "means test" form to determine their ability to repay their unsecured debt.  You pass the means test if your income is less than the median income figures on this chart.  It is not quite that simple, though, because there are all sorts of legal arguments over the definition of family size and what counts as income.

See my post and other information on means testing on the Bankruptcy Law Network.  If byou have primarily non=consumer debt, you may be exempt from the means test.

The Kansas income guidelines for the bankruptcy means test go up February 1, 2008.

Kansas Median Family Income by Family Size for Bankruptcy Cases Filed on or After February 1, 2008,

• 1 earner……….$38,594
• 2 persons……..$52,989
• 3 persons …….$58,075
• 4 persons …….$69, 831
• 5 persons …….$76,731
• 6 persons …….$83,631
• Add $6,900 for each additional individual