It will be just a little bit easier or a little bit harder to qualify for filing a Chapter 7 “straight bankruptcy” as of November 1, 2011. Whether it’ll be easier or harder for you depends on the state where you reside and on your family size.
What changes on November 1? The bankruptcy system looks to the U.S. Census to calculate each state’s median income, as it applies to each size of family. Median income is the amount at which half of the state’s families have incomes higher and half have lower. If your income is below your state’s median income for your size of family, then in almost all situations you can file a Chapter 7 case. But if your income is above that median income amount and you still want to file a Chapter 7 case, then you have to fill out a long and rather complicated form about your allowed expenses to determine whether or not filing a Chapter 7 case would be “abusive.” So if you want to file a Chapter 7 bankruptcy, it’s a lot easier if you’re below the median.
On November 1, new median income amounts go into effect. Some people were predicting these amounts would be lower because of the faltering economy. But in many states the income figures went up instead of down. For example, among single-person families, 31 of the states’ median incomes went up and only 19 went down. Remember, if the median income goes up, that makes it a little more likely that your income will fall below that median, so that you’ll have smoother sailing qualifying for Chapter 7.
So, if your income is close to the applicable median amount, and the median is increasing for your family size in your state on November 1, then you have a better chance at falling under the median if you file on or after that date. But if the applicable median is decreasing, then you have a better chance of falling under the median if you file your bankruptcy before then, by no later than October 31.
I’m about to give you the two lists of median income amounts for all the states—the list applicable through October 1, and the other starting on November 1. But before you start comparing those annual income amounts to your income, please understand that the meaning of “income” in this context is quite different than the conventional meaning of that word. “Income” here is calculated using a six-calendar-month look back period that is doubled and then divided by 12 for an average monthly income. It includes all sources of income from all family members other than social security, not just taxable income.
Because of this and many other sorts of complications, yon truly need to consult with a bankruptcy attorney about whether this November 1 set of median income changes matter to you, and whether you should try to file before then or instead after. But, just to get you started, here are the two median income lists: the one to use until October 31, 2011, and the other to use after that.