How do you qualify for a “Straight Bankruptcy”?
The most common type of bankruptcy is a Chapter 7. It’s also the most convenient. Many people tend to call it a “straight bankruptcy” as it is the most straight-forward. You can generally get rid of all your unsecured debt in a few months with very low cost. No payment plan, just relief from debt, which is what we all want.
The easiest way to qualify for a Chapter 7 is to have an annual income below the median for your size household. What is the median, you ask? The median income is the amount that divides the population into 2 groups. If you are below the median then you are in the lower 50% of the population in terms of income.
What is the Median Income, and why does it change?
In April of 2023 the US Trustee’s office announced the biggest increase in Minnesota median incomes for bankruptcy purposes since 1998. For all household sizes from 1 to 4 the increase was about 8%. These increases happen every 6 months, once in April and once in November. That means that on average, they think the median income in Minnesota is going up by 16% a year. Now, this number can change, and will change. Sometimes it goes up and sometimes it goes down, but the higher it is the better for filing Chapter 7.
Minnesota Median Income, crunching the numbers.
The exact numbers for Minnesota as of April 2023 are the following:
- One Person: $71,643
- Two People: $90,946
- Three People: $114,324
- Four People: $141,324
- Add $9,900 for each individual in excess of 4
For a household of one the increase is $5,309 a year. That is a huge jump! For 2 people its $6,739 more per year. For 3 people it’s a $8,467, and 4 people is a $10,472 increase. These numbers are enormous, so if you thought you didn’t qualify for a Chapter 7 before, take another look.
These changes are making it easier for people to file, and that is a good thing. Remember, bankruptcy isn’t a bad thing, it exists to help people. So help us help you. We’re always a click or a phone call away!
The post Big Bump in Median Income Makes Filing Chapter 7 Easier Than Ever! appeared first on Walker & Walker Law Offices, PLLC.
