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Introduction: Are You Eligible for Chapter 7 Bankruptcy?
Despite what you may have heard about changes in bankruptcy law, most people who need bankruptcy protection are still eligible.
This calculator will help you find out.
It applies the formulas, regional income and expense standards, and calculations of the new "means test" that was a cornerstone of BAPCPA, the 2005 bankruptcy law (11 U.S.C. 707(b)). It uses the language and formatting of the new, 2014 version of Official Form 22A-1, Official Form 22A-1Supp, and Official Form 22A-2 , just a few of several forms you will need to complete if you decide to file for bankruptcy.
Read the instructions carefully (for official instructions for PDF forms, click here). If you are unsure whether an item applies to your situation, make a note of your question. Ask a bankruptcy lawyer about it if you go for a free consultation.
Pennsylvania "Median Income" Test
If your monthly household income is less than the Pennsylvania median
income for a household of your size, you are presumed to be eligible to file for Chapter 7 bankruptcy under Section 707(b)(2).
Compare your household income over the past six calendar months to the state median.
Household Income Test for Pennsylvania
Compare your household income to the Pennsylvania median income.
For Cases Filed on or after November 1, 2014.
Form 22A-1 requires you to total up your income for the last six calendar months, average it, then annualize it, and then compare it to the Pennsylvania median for your size household.
If your income is below this amount, you meet
the requirements of the "means test" (section 707(b)(2) of
the bankruptcy code) to qualify for Chapter
The chart below makes it a bit simpler to figure out. Compare your six-month total income over the last six calendar months to the "6 Mo. Total" in the chart below to get a rough idea of which side of the line you fall.
Pay attention to the rules about household size.
If LESS <
> If MORE
Chapter 7 is an option.
Not legally required to complete Form 22A-2, but may want to anyway.*
||6 Mo. Total
You must complete Form 22A-2 to determine if Chapter 7 is available.
Trustee Program, Department of Justice,
U.S.C. Sec. 707(b)(7) exclusion.
Form 22A-1, Line 13
Trustee, U.S. Department of Justice (for bankruptcy cases filed on or after November 1, 2014)
(*The applicable household size is the number that would currently be allowed as exemptions on your federal income tax return, plus the number of any additional dependents whom you support.)
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Median Income Test Explained
The bankruptcy law determines your income by looking at your household
income during the six full calendar months before you file for bankruptcy.
Effect of the six-month income rule
If your income declined suddenly within the past six months and has
not yet increased, waiting until after the first of the month to file
will lower your monthly income figure used for the means test. That
is, even if you don't qualify this month, you may qualify after the first
of next month, or the month after that, if your income remains below
the average monthly income for your state.
Effect of the number of people in your household
You may have noticed already that changing the number
of persons in the household dramatically affects the median
income figure. You can't include a roommate who is not your
dependent in your household size, yet you may have to include the portion
of their income that contributes to the overall income of the household.
See the help topic on that subject.
If your six-month household income was more than Pennsylvania's median income for a household of your size, don't
fret. Fill out Form 22A-2 (Expense Deductions).
You probably still qualify for Chapter 7, but you'll need to answer
more questions to find out. Most people qualify once all factors are
taken into account.
Info is not advice
This site points to numerous books, articles and services that
can help you figure out whether it makes sense for you to file
However, this website cannot answer whether you, specifically,
should or should not file for bankruptcy.
If you're still not sure whether bankruptcy is right for you,
you may want to seek
credit counseling from a reputable agency or consult
* If your six-month household income was less than the median for your state, consider
Complete Form 22A-1 of the calculator to make sure that you've properly computed your income. Although you are not legally required to complete Form 22A-2, the "expenses" part of the means test, it will give you a sense of how a judge or trustee might view your ability to pay.
Some judges look to your ability to pay as part of the "totality of the
circumstances" test (Section 707(b)(3)), and will bar you from Chapter 7 bankruptcy, whether your income is above or below the median.
Bottom line: Whatever your income, if the calculator indicates that
you have money left over after expenses, study the list of allowed expenses
in the means test form and fill in any that apply.
Another thing to worry about: Some judges may rely on different required forms
as guides in looking at the "totality of the circumstances" under 707(b)(3): Specifically Form
6, Schedules I and J. These forms also deal with income and expenses but can yield a different "disposable
income" result than the means test form (Form 22A) because different things are allowed and excluded on each form. Most notably, the means test income
formula (and this calculator) excludes income from Social Security benefits, while Schedule
I does not. Whether your Social Security income can render you ineligible for Chapter 7 is an unsettled area of law. At least one court has ruled that, by enacting the means test as it did, Congress intended that Social Security income be excluded when determining Chapter 7 eligibility; however, it still must be reported on Schedule I.
If you have significant income from Social Security benefits, be aware of this issue.