The means test in bankruptcy is the gateway to filing a Chapter 7 case. In order to determine whether a debtor will qualify for a Chapter 7, attorneys perform a complex set of calculations using a set of standard dollar figures based on family size and location. These standard figures are published by the U.S. Trustee’s office and sometimes change as the cost of living changes.
The U.S. Trustee has issued a new set of numbers, scheduled to go into effect November 1, 2010, and the median income for Minnesota has decreased. This means that a filer’s household income, based on family size, must be lower than before to automatically qualify for Chapter 7. For example, the median income for a household of two is currently $62,162. Under the new numbers, the median for that household size will be $60,694.
What does all this mean? Well, remember the rush to file before the bankruptcy law changed in 2005? This time, we may see a mini-spike in bankruptcy filings leading up to October 31 as people try to file under the old means test figures. And it may mean that more clients will fall above the new median income figures, which could mean more Chapter 13 cases will be filed, or that Chapter 7 cases will be more complicated for the attorneys handling them (and therefore more expensive for clients).
Contact a bankruptcy attorney (like me) to discuss the impact of this change on your situation.