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In most cases, you are automatically eligible for Chapter 7 if your annual household income is at or below the certain median income levels. . In Minnesota, the median income figures established by the Census Bureau, for use in bankruptcy cases filed on or after March 15, 2009, are as follows:

Household Size * Median Income
One Person $47,592
Two Persons $62,073
Three Persons $75,603
Four Persons $87,634

* $6,900 for each individual in excess of four

You can see from the above figures that most people can still file Chapter 7, if they so desire.

Even if your household income exceeds the above figures, the 2005 Bankruptcy Act still allows you to file chapter 7 if you pass the “means test.” The means test compares your household income to your household living expenses, using a combination of your actual living expenses, and living expenses approved by the Census Bureau for expenses such as food, clothing, transportation and the like. If the means test shows you can afford a Chapter 13, then you probably cannot file Chapter 7, unless special circumstances can be shown. However, almost everyone passes the means test.

“Income” includes any monetary income, whether from wages, business, gifts of money, “side jobs,” or any other money received.  Often it includes the income of a non-filing spouse or significant other.  It does not include loans or credit card charges or advances.  It is important to note that under the bankruptcy law, annual income is calculated by taking your last six months income and multiplying it by two.  This may lead to anomalous results for those recently experiencing a change in income.  Be sure to discuss the correct timing of your bankruptcy filing with your lawyer.

Call for a free consultation with an attorney about how you can still qualify to file Chapter 7.