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RI Bankruptcy Law: Median Income Figures Change Again

by Mark Buckley

RI bankruptcy lawyers have new income guidelines to determine who qualifies for Chapter 7 bankruptcy relief.  On November 1, 2012, the US Census figures became effective for all new consumer bankruptcy filings.  Other than for 3-person households, it became slightly more difficult to qualify for Chapter 7 bankruptcy relief for every other household size in Rhode Island.

Below are the median income figures that I use for my Rhode Island clients who need to file for bankruptcy protection:

  • 1 person household $ 45,945 (down from $ 47,798)
  • 2 person household $ 60,538 (down from $ 61,506)
  • 3 person household $ 75,306 (up from $ 68,909)
  • 4 person household $ 82,086 (down from $ 88,990)
  • Add $ 7,500 for each additional household member above a 4 person household

As a reminder, these are gross income figures.  To determine whether you qualify for Chapter 7 bankruptcy relief, we take your trailing 6 months of gross income from all sources (except Social Security and unemployment benefits), multiply it by two and then compare it to the chart above.

While its easier to qualify for a Chapter 7 bankruptcy with gross income lower than the median, in many cases, you may still qualify with income slightly higher than the median.

Bottom line: Its impossible to forecast whether it will become easier or more difficult to file your Chapter 7 case in the future.  Even if you are not ready to file your case now, I can run an analysis on your family’s income to see if your income is presently low enough to qualify for debt relief.

Filed Under: Blog, Means Test, Rhode Island Tagged With: bankruptcy lawyers, CERTIFIED FINANCIAL PLANNER, Chapter 7 bankruptcy, Mark Buckley, Rhode Island bankruptcy, RI bankruptcy lawyer, RI bankruptcy lawyer Mark Buckley, RI means test

Rhode Island Bankruptcy Debtors Catch a Break

by Mark Buckley

Twice a year, the US Census Bureau and the IRS provide data used by bankruptcy lawyers to determine who qualifies for debt relief.  On May, 1, 2012, the new income numbers became effective for all new bankruptcy case filings.  The good news is that median income figures rose for all household sizes in Rhode Island.

Below are the new median income figures that I will use for my Rhode Island clients who need to file for bankruptcy:

  • 1 person household $ 47,798 (up from $ 46,335)
  • 2 person household $ 61,506 (up from $ 59,624)
  • 3 person household $ 68,909 (up from $ 66,800)
  • 4 person household $ 88,990 (up from $ 86,267)
  • Add $ 7,500 for each additional household member above a 4 person household

As a reminder, these are gross income figures.  To determine whether you qualify for Chapter 7 bankruptcy relief, I will examine your trailing 6 months of gross income from all sources, except Social Security and unemployment.  I will then double the gross figure and compare it to the chart above.

Bottom line: Many more who need to file for bankruptcy protection in Rhode Island now qualify.  This window of opportunity may only be available for a short period, so if you are considering bankruptcy, call a qualified RI bankruptcy attorney today.

Filed Under: Blog, Means Test, Rhode Island Bankruptcy Articles Tagged With: Bankruptcy, bankruptcy attorneys, bankruptcy filing, bankruptcy lawyer, bankruptcy lawyers, Chapter 7 bankruptcy, filing bankruptcy in Rhode Island, Mark Buckley, Rhode Island bankruptcy, Rhode Island Bankruptcy lawyer, RI bankruptcy lawyer, RI means test

RI Bankruptcy Means Test

by Mark Buckley

Since 2005, the bankruptcy “Means Test” has been used to determine who qualifies for  Chapter 7 bankruptcy relief here in Rhode Island.  It acts as a “gatekeeper”.  The Means Test attempts to measure the cost of living in Rhode Island and how your gross income compares to that of other families of the same size.

The test is arbitrary and has had some unfair results.

For each state, the census calculates the median (middle) gross income for all family sizes.  A person filing for bankruptcy must then show all the gross income generated in their household for the prior 6 months, double it, then compare that number to the census figure.

If their gross income falls below the census figure, they pass the means test and can move forward.  If their gross income is higher than the census figure, the process gets very complicated and can prevent a debtor from filing a Chapter 7 case.

Failing the Means Test often means having to pursue relief under Chapter 13 of the bankruptcy code which is a 5 year repayment plan.

On November 1, 2009 there will be new income limits for Rhode Islanders who are contemplating a bankruptcy filing.  Only households of 2 or 3 persons will find it easier to file bankruptcy after the change.  Single persons and households larger than 3 will find it more difficult.

Here are the new median income figures for RI households that will be used for Means Testing effective 11/1/09

  • 1 person $ 45,222
  • 2 people $ 62,806
  • 3 people $ 76,846
  • 4 people $ 87,002
  • 5 people $ 93,902
  • 6 people $ 100,802
  • 7 people $ 107,702
  • 8 people $ 114,602
  • each additional person add $ 6,900

But what counts towards gross income?  And how do we calculate family size for income comparison when there are so many living arrangements these days?  These are good questions and cannot be answered in this article because every case is different.

If most/all your income is being used just to pay monthly credit obligations you need advice today.  Call 467-6800 for a free telephone consultation, or leave some contact information and I will be happy to call you.

Filed Under: Means Test, Rhode Island, Rhode Island Bankruptcy Articles, Rhode Island Chapter 7 Tagged With: filing for bankruptcy in RI, Mark Buckley, RI bankruptcy, RI bankruptcy lawyer, RI Chapter 7, RI means test

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