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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 |