Kansas Means Test Get Nicer March 15

The bankruptcy means test gets a little nicer to Kansas consumer debtors on March 15, 2011, when new, higher median family income figures go into effect. Kansas families will be allowed to have more gross income to pass the bankruptcy means test on the first round of analysis.

The median family income is used as the first step in determining whether or not a consumer may file a chapter 7 bankruptcy.  If the person’s median family income is below the average income for his state, then he qualifies to be in a chapter 7 without having to do any further analysis of his financial situation. In Chapter 13 bankruptcy, the median family income is used as the first step in determining how much, if any, unsecured debt without priority has to be paid back. Many debtors pay little or no unsecured debt in their chapter 13 repayment plans.  They use chapter 13 as a tool to adjust their debt and manage their financial difficulties in an affordable fashion.

Here are the new means test figures for Kansas bankruptcy cases by household size:

1  $41,654 (up $672)

2  $57,174 (up $923)

3  $64,863 (up $1047)

4  $69,272 (up $1118)

5   $76,772 (up $1118)

6   $84,272 (up $1118)

add $7500 for each additional person.

These figures are to be used for bankruptcy cases filed on or after March 15, 2011.

Bankruptcy Means Test Meaner as Family Incomes Drop

As the economy worsens, unemployment rises and family incomes are dropping, getting bankruptcy help gets a little tougher.

The bankruptcy income guidelines go down a few hundred dollars for Kansas cases filed on or after March 15, 2010.  While this change probably won’t disqualify many debtors, the downward trend is disturbing and more evidence the means test is a mean test.

Here are the new Kansas median income figures by family size used for part one of a two part-test to determine bankruptcy eligibility:

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

But do not despair if your income is higher than these numbers and you need bankruptcy help.  You are not automatically disqualified. These numbers are used in part one of the means test to figure out whether Kansans may get rid of their general debts such as credit cards and medical bills in bankruptcy.

You have a second chance to pass the bankruptcy means test [Read more…]

Surrendered Collateral Doesn’t Count on Bankruptcy Means Test?

22C EXPENSE NOT PERMITTED ON SURRENDERED COLLATERAL
In re Miller, Case No. 07-22927
December 2008, Judge Somers
This decision ties to the concepts enunciated in the various Lanning decisions, i.e., to
what extent may post petition changes in circumstances be considered in determining
what is to be paid by an above the line debtor.  Digest by Jan Hamilton, Trustee.

Income and Expenses After Bankruptcy Change Chapter 13 Means Test

REITERATION THAT INCOME AND EXPENSE CHANGES MAY BE
CONSIDERED POST PETITION IN 13.

In re Tholl, Case No. 07-22677
December 2008, Judge Somers
Court reviewed and followed the Melvin decision regarding changes of income and expenses after the filing of the chapter 13 bankruptcy but prior to confirmation of the chapter 13 bankruptcy plan.

Deviation from Bankruptcy Means Test for Expenses, Too

LANNING EXTENDED TO EXPENSE SIDE
In re Melvin, Case No. 07-22352
December 2008 Judge Somers

Court extended the Lanning analysis and found there was no binding precedent on the issue of whether actual of 22C expenses were mandated and found that 22C expenses may be deviated from also. This is consistent with dicta in Lanning, and Judge Nugent in In Re Hoss, 08-10365, and In re Arroyo, No. 07-12779. It may also be inconsistent with Judge Karlin in the bankruptcy court decision in Lanning.

Lanning has been appealed by the bankruptcy trustee and is currently pending in the U.S. Supreme Court.  Oral argument is expected in March 2010.

Digest by:  Jan Hamilton, Trustee

How Do I Deduct My Non-Filing Spouse’s Expenses on the Bankruptcy Means Test?

HOW EXACTLY DO WE DEDUCT ‘MARITAL ADJUSTMENTS’?
In re Dugan, Case No. 07-40899
August, 2008, Judge Karlin
Chapter 13 Trustee objections to debtor’s attempts to include a marital adjustment on Lines 13
and 19 for a non-filing spouse and a deduction for transportation expenses. Court
allowed, in theory, the marital deduction, but found it had not been supported with any
detail. Debtor was given time to provide documentation. Digest by Jan Hamilton Trustee.

U.S. Supreme Court Takes Topeka Bankruptcy Case

A Topeka, Kansas, consumer bankruptcy case is pending in the U.S. Supreme Court. It involves the Topeka chapter 13 trustee objecting to Stephanie Lanning’s bankruptcy plan.

Lanning had taken a buyout and left her job at Payless Shoesource.  She was working at Joann’s Fabrics for less money when her bankruptcy was filed.

When Lanning took the bankruptcy means test, the Payless buyout caused her income average to be higher than her current income and higher than the median for a single person in Kansas.  She would have been required to make a bankruptcy payment she could not afford to make with her lower income. [Read more…]

Means Test Allowances

U.S. Trustee on means testing

national expense_standards for means test

Kansas housing charts for means test

More Kansans Can Qualify for Bankruptcy Help with Increased Income Allowances

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