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What Happens To My Bankruptcy If I Earn More Than The Median Income?

Posted By admin || 19-Nov-2010

What Happens To My Bankruptcy If I Earn More Than The Median Income?

New median family income guidelines have gone into effect as of November 1, 2010.

Texas Median Family Income

For the state of Texas the median family income is as follows:

  • Single Wage Earner: $37,676
  • Family of Two: $54,288
  • Family of Three: $55,534
  • Family of Four: $64,420

For a family of more than four, an additional $7,500.00 per person is added.

Individuals making less than the median income as stated above qualify to file Chapter 7 bankruptcy .  But what if your income is above the median income in Texas?  Well you may need to file for Chapter 13 bankruptcy and pay some or all of your debts back over the course of a 3 to 5 year period.  But that will only be determined by the Means Test which is a test that takes into account all of the expenses allowed by the IRS that could actually reduce your income, taking your income below the income guidelines above.

For example, the Means Test can deduct certain allowable expenses such as mortgage payments, taxes, car payments etc. that could reduce the debtor's income for the purposes of determining their eligibility for Chapter 7 bankruptcy. For those debtors who are just on the edge of meeting the median income guidelines, the Means Test could help them qualify for Chapter 7 bankruptcy; but for those very high income earners, Chapter 13 bankruptcy may be inevitable.

If you're not sure how the number in your household should be determined, or whether or not you should include the income of certain household members, please speak with your bankruptcy attorney.

Categories: Bankruptcy
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