Means Test

May 1, 2015

Means Test Numbers Adjusted

New median income figures for Kansas for cases filed on or after May 1, 2015:

one $45,980 (from $45,246)

two $60,577 (from $59,610)

three $66,065 (from $65,010)

four $76,017 (from $74,804)

add $8100 for each family member over 4.

 

November 1, 2012

Median income fell making bankruptcy means test meaner again for Kansas debtors seeking bankruptcy relief after November 1, 2012. All family sizes had drops in income since the May 1, 2012. The largest decreases were $1210 for single earners and $1864 for two-person households.
1 $41,714 down $1210
2 $55,698 down $1864
3 $64,571 down $263
4 $74,853 down $106
5 $82,353 down $106
– add $7500 for each additional person.

This drop in income makes the means test harder to pass for consumer bankruptcy cases filed on or after November 1. Debtors who earn less than the median income pass the means test on the first go around. Debtors who earn more than the median income must go on to round two and complete a complicated analysis of income and expenses to determine if they have disposable income to pay their unsecured creditors at the end of the day. The means test is supposed to tell if a debtor has money left over after living expenses to pay creditors. It says, at least in theory, whether filing a chapter 7 bankruptcy would be abusive or if a chapter 13 payment plan bankruptcy is required.  It also determines if the payment plan must be at least three years or five years.

Most Kansas Debtors Pass Means Test

Do not despair, the means test is not a problem for most Kansas debtors. Even for those people who are required to file a chapter 13 payment plan, the payments are usually far, far less than paying all the debt. The interest, penalties and late fees also stop in most cases. Many times, very little of the general unsecured creditors are paid back in a chapter 13 bankruptcy case. The income figures are based upon census data by family size for your state. The U.S. Trustee Program publishes a table of median income for use in future bankruptcy cases. Official Bankruptcy Form 22A or 22C (Statement of Current Monthly Income and calculations). Bankruptcy Form 22A is the chapter 7 form. Form 22C is the chapter 13 form.

 

November 1, 2010

Median family income for Kansas bankruptcy cases filed November 1, 2010, or after:

KANSAS $40,982 $56,251 $63,816 $68,154

* Add $7,500 for each individual in excess of 4.

March 1, 2010

Here are the new Kansas median income figures by family size used to determine bankruptcy eligibility for cases filed on or after March 1, 2010:

  1. $41,210
  2. $57,561
  3. $63,212
  4. $72,352

November 1, 2009

Here are the new Kansas means test income figures for cases filed on or after November 1, 2009:

  1. one earner household $41,357 (up $353)
  2. two person household $57,767 (up $1621)
  3. three person household $63,438 (up $193)
  4. four person household $72,610 (down $2016)
  5. add $6900 for each individual in the household in excess of four.

March 15, 2009

New Guidelines for Cases Filed on or after March 15, 2009

The Kansas median income increased on the bankruptcy means test for cases filed on or after March 15, 2009, through October 31, 2009. The new figures by family size are:

  • one earner $41,004
  • two people $56,146
  • three people $63,245
  • four people $74,626
  • five people $81,526
  • six people $88,426

* Add $6,900 for each individual in excess of 4.

What the Means Test Means

Congress created a means (income) test to determine which consumer debtors must pay back some or all of their unsecured creditors in bankruptcy. Don’t worry. We have this test figured out. We will determine how this test applies to you.

If your household income is below the statewide median income, you pass the means test. Most Kansas consumer debtors pass.

But if your household income is above the statewide median income, you use IRS guidelines, not actual expenses, for certain household living expenses to determine if you have excess disposable income to pay your unsecured creditors. So far, most of our clients pass the test at this stage even if they failed the initial stage.

Census Bureau, IRS Data and Administrative Expenses Multipliers

In chapter 7 cases, the means test is calculated on an official form designated Form B22A. If you have excess income, your chapter 7 case may be dismissed for abuse. To avoid dismissal, you may file a chapter 13 case.

In chapter 13 cases, debtors must fill out Form B22C, a different version of the means test. B22C determines the amount to repay unsecured creditors in a chapter 13 plan.

There are many legal arguments over the definition of household, what is income, and what can be deducted to determine if a debtor has disposable income to pay his creditors.  This test was designed to scare you away from filing for bankruptcy.  You can see how complicated the test is with this means test calculator.  Don’t despair, we will fill out the means test for you.  Almost every client we have met passes the means test and qualifies for some type of bankruptcy help.

Individual debtors with primarily business debts are not required to pass the means test. See my post on Bankruptcy Law Network.

2008 and 2009

Guidelines for Cases File on or after October 1, 2008, but before March 15, 2009, see below

Here are the bankruptcy income guidelines that went into effect October 1, 2008:

  • 1 earner $39,488
  • 2-person families $54,070
  • 3-person families $60,906
  • 4-person families $71,867
  • 5-person families $68,548
  • 6-person families $63,075
  • Add $6,900 for each additional individual
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