Why is it so essential to increase the median income in New York for bankruptcy purposes? Essentially, it facilitates a simpler bankruptcy procedure. When a debtor files for Chapter 7 bankruptcy, he or she is exempt from the complex ""Means Test"" as long as his or her annual income is equal to or less than the local median income.
What exactly is the ""Means Test""?
The """"Means Test"""" essentially requires a debtor with an above-average income to justify why he or she cannot pay debts as they become due. In reality, even if an individual earns more than the MI in their specific location, it is illogical to assume that the excess income is readily available to the debtor. Some debtors have expenses that other debtors do not, which may help explain why they earn a higher-than-average income but are still unable to pay their creditors. It is a test designed to screen out those debtors who have sufficient """"disposable income"""" at the end of each month to pay their creditors in accordance with a Chapter 13 Plan.
What About Joint-income couples?
If you are married, your income and your spouse's income will be added together to determine the median-income threshold. It can assist in determining which exemptions are advantageous for your household, which essentially determines which assets debtors will retain after filing for bankruptcy.
New York's updated median income requirements
The table below reflects the revised """"median income"""" requirements and the percentage change as of today. Every state besides New York has its own MI, which should be considered when deciding whether to file for bankruptcy.
The revised New York Census Median Income as of March 15, 2011: 1 person: $46,295 annually
Additional dependent(s) per household: Add $7,500 per each dependent
Essentially, if your annual income is less than the """"median income,"""" filing for bankruptcy will be less complicated. However, if your income is greater than the median, we will need to plan your bankruptcy accordingly to pass the ""Means Test.""Planning is essential for anyone contemplating filing for bankruptcy protection, regardless of whether they are contemplating a Chapter 7, 13, or 11 petition.
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