Effective April 1, 2014, the median income figures applicable to California bankruptcy cases will rise.
Single earner households making less than $48,498 per year will not be subject to means testing in order to qualify for Chapter 7 bankruptcy. This represents a rise of 1.4% over previous figures of $47,798.
For households of 2 people, those bringing in less than $62,917 per year will not be required to undergo means testing, a rise of 1.4% from previous figures of $62,009.
For households of 3 people, those earning below $67,594 per year will not be required to undergo means testing, up from $66,618.
For households of 4 people, those earning below $76,211 per year will not be required to undergo means testing, up from $75,111.
What does this mean to you if you’re thinking of filing for bankruptcy in California?
It means you can earn more money in the six months immediately prior to filing your case and still qualify for Chapter 7 bankruptcy without having to go through the means testing process.
It does not, however, mean that you won’t qualify for Chapter 7 bankruptcy if you make above the new median income numbers. Remember that the means test is a starting point only, and doesn’t necessarily mean you’re eligible for one type of bankruptcy relief or the other.
Don’t forget that you may want to elect a Chapter 13 bankruptcy remedy even if you don’t have to do so. It all depends on your goals, which you’ll discuss when you talk with a lawyer.
And one more thing – if you call a bankruptcy lawyer’s office and they tell you that you can’t file for Chapter 7 bankruptcy in California if you make more than the median income … run. It means the bankruptcy attorney is lazy, uninformed, or just a bad lawyer. Income is one factor in qualification for Chapter 7 bankruptcy, but it’s not the only one.