For most families in Washington State, qualifying for Chapter 7 Bankruptcy or a 3 year Chapter 13 Bankruptcy plan just got harder.
There are a number of ways to measure if a Washington State family or individual qualify for filing a Chapter 7 or Chapter 13 Bankruptcy. Many of the measures include nebulous terms like ‘good faith’, ’ best effort’, or ‘totality of the circumstances’. Of course, this leaves much up to the interpretation of your trustee or judge, based on their interpretation of the US Bankruptcy Code and prior case law.
One thing is pretty clear though, families whose annualized income (based on actual income for the previous 6 months) is lower than annual median income for families of their size in their state, are presumed to meet the various standards for qualification for a Chapter 7 Bankruptcy or a 3 year Chapter 13 Bankruptcy plan. That is pretty good news for many of the Washington families out there having debt problems.
The bad news is that for most families in Washington, the median income standard as calculated by the US Census Bureau and Published by the US Bankruptcy Trustee drops on November 1, 2011.
The Median income until October 31 is as follows
1 Person- 49,930
2 Persons – 63,324
3 Persons – 72, 524
4 Persons – 82, 602
5+ Persons – Add $7500 per person
The Median income for the Means Test starting November 1, 2011 is as follows
1 Person – 51, 671
2 Persons – 61,919
3 Persons – 69, 195
4 Persons – 80,404
5+ Persons – Add $7500 Per Person
So, if you are single, the news is good, if you are not, the news is bad. I try not to read too much into these figures as they fluctuate twice a year, but here, the drops reflect negative changes of up to 4.5% in 6 months. That is is a pretty big drop, and in my opinion accurately reflects the negative economic climate.
One important thing to keep in mind is that this standard is not absolute. Some folks with exceptional circumstances pass the Chapter 7 or Chapter 13 short plan means test in Washington State even if they have above median income. And some folks who have lower than normal expenses have been challenged and not allowed to file Chapter 7 even though they are below median, usually because they have a fair amount of disposable income with which to pay some of their debts over 3-5 years.
Ultimately, the means test is just a guide that requires a qualified WA Bankruptcy Attorney to interepret on a case by case basis to give the best chance of success. If you are a WA resident and are considering Bankruptcy, you should contact a WA Bankruptcy Lawyer for guidance. And if you are a resident of Snohomish, Skagit, Island, or Whatcom Counties, feel free to contact me for a no obligation 30 minute telephone consultation to discuss your rights under the US Bankruptcy Code at 425.405.5750.
Until Next Time.