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Chapter 7 & 13 | Consumer Bankruptcy

BANKRUPTCY MEANS TEST

The bankruptcy "means test" only applies to persons whose annual household income exceeds their states' median income. In Minnesota, the median income figures established by the Census Bureau, for use in bankruptcy cases filed on or after November 1, 2017, are as follows:

Household Size* Median Income
One Person $53,474
Two Persons $72,734
Three Persons $85,979
Four Persons $105,651
* Add $8,400 for each individual in excess of four.

 

You can see from the above figures that most people can file Chapter 7 without worrying about the means test.

Even if your household income exceeds the above figures, the Bankruptcy Reform Act still allows you to file chapter  7 if you pass the means test. The means test compares your household income to your household living expenses, using a combination of your actual living expenses, and living expenses approved by the Census Bureau for expenses such as food, clothing, transportation and the like. If the means test shows you can afford a Chapter 13, then you probably cannot file Chapter 7. However, almost everyone passes the means test.

“Income” includes any monetary income, whether from wages, business, gifts of money, “side jobs,” or any other money received.  Often it includes the income of a non-filing spouse or significant other.  It does not include loans or credit card charges or advances.  It is important to note that under the bankruptcy law, annual income is calculated by taking your last six months income and multiplying it by two.  This may lead to anomalous results for those recently experiencing a change in income.  We can help you determine the correct timing of your bankruptcy case.

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