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WHAT IS THE MEDIAN INCOME TEST?

The “Median Income Test” is a preliminary test to determine whether you need to pass the “Means Test” in order to qualify to file a Chapter 7 bankruptcy.

But if your debts are not primarily consumer debt, then you don’t have to take and pass the Median Income Test.   Other limited exceptions may apply as well.

If you pass the “Median Income Test”, then you don’t have to pass the Means Test.

Under the Median Income Test, you calculate your “median income” (using government statistics) and compare it to the median income for a similarly sized family in your State.

If your average monthly income is less than the average monthly income for a similarly sized family, you pass the Median Income Test, do not have to pass the Means Test, and, in most cases, you may “pass go” and file a Chapter 7 bankruptcy.

Note: The Median Income Test also has ramifications for Chapter 13 filers as well.

DISCLAIMER

Seek professional legal advice regarding the applicability and calculations pertaining to the Median Income and Means Tests related to bankruptcy.  The issues and laws related to this article (and bankruptcy in general) can be complex.  This above is a generalized explanation.   Further Disclaimer

 Author: Attorney Matthew B. Tozer
 
Copyright 2011

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