Chapter 7 Bankruptcy in Kane County, Illinois
The Means Test
Federal bankruptcy law mandates that a debtor must pass a means test in order to file a Chapter 7 bankruptcy petition. This requirement was developed in an effort to prevent bankruptcy abuse and has been in place since 2005. The means test is a two-step process that involves:
A comparison of the debtor’s income to the median income for a family of the same size, in that state. As of March 15th, 2009, the median income for an individual filer is $47,335 per year. For a two person family, the median is $60,049, for a family of three the median is $68,730 and for a family of four the median level is $81,184. For families with more than four members, you may add $6,900 per person.
An evaluation of the debtor’s income versus his or her “allowable expenses” which are certain necessary expenses classified as such by the IRS. In subtracting allowable expenses from the debtor’s income, his or her disposable income is calculated.
If a debtor earns more than the state median income level, this does not automatically disqualify him or her from filing a Chapter 7 petition. This activates the second step of the means test, the evaluation of disposable income. Depending upon the debtor’s disposable income, he or she may or may not qualify to file a Chapter 7 case.
Kane County Bankruptcy Lawyer
Determining eligibility for Chapter 7 bankruptcy using the means test can be complex. There may be certain ways that a lawyer can assist you in determining what should be classified as allowable income, in order to help you qualify even if you earn more than the current Illinois median income for a family of your size.
Contact Kane County bankruptcy attorney Joseph Doyle for a free consultation regarding your case.
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