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A Free Online Median Income Calculator to Make Contemplating Bankruptcy in Arizona Easier!

By Joseph McDaniel, Esq.

There's this thing called "the means test".

It is entirely a creature of statute, and didn't exist in United States Bankruptcy Law until 2005 (the Means Test was born in the same horrific statute that killed the Superdischarge in Chapter 13 Bankruptcy Cases; I miss the Superdischarge).

The Means Test functions as a Limbo Bar, and those who can pass under it, in terms of income and family size, are permitted to file a Chapter 7 Bankruptcy (think "less agonizing").

I have previously listed the Free Online Means Test Calculator in the Arizona Bankruptcy Homework Blog, so that my prospective clients can get a feeling as to their ability to pass under the bar.

But some folks don't need the full blown Free Online Means Test Calculator; they can just check to see that they are, for the six months prior to filing, below the median income for this geographical vicinity.

But how to easily find that information, which is important to for a person contemplating bankruptcy in Arizona, or anywhere else?

IF ONLY there were a free, easy, online tool which could assist in finding the median income in any given geographical area, in order to HELP people who are thinking about filing a bankruptcy reach some tentative conclusions!

Of course, there is such a tool. And here it is, as a courtesy from a software company. Obviously, I don't control it and do not vouch for its accuracy or precision, but it's a handy first cut at the ball kind of tool!

Now, I've been told that people who are thinking about filing a bankruptcy are sometimes a little stressed, so I'm going to make today's lesson short: there is a Means Test, and it's complicated. If your family income is below the median income for your geographical area, you will probably be permitted to file and prosecute a Chapter 7 Bankruptcy Case in Arizona, and you don't need to worry about the long form calculation of the Means Test.

And don't goof it up by making withdrawals from your 401(k) or IRA, which will count as income for Means Test Analysis purposes!

Next to come: exceptions to the Means Test! A lovely couple recently went shopping to research bankruptcy lawyers (including a visit to a Bankruptcy Mill in Arizona, but fortunately they emerged unscathed) and they reported back that the lawyers they talked to (not a lawyer at the Bankruptcy Mill, of course, because you don't talk to a lawyer there until you get hooked by The Salesmen!) never mentioned the exception to the means test that I'd told them about.

So exceptions to the Means Test will be among the topics I address next.

Full post as published by Arizona Bankruptcy Attorney Blog on November 19, 2010 (boomark / email).