The M & M’s of Bankruptcy in Indiana

May 19, 2013 1:07 pm Published by

This is the week for going back to the basics in my Bankruptcy in Indiana article series. For both newcomers and veteran readers thinking of filing individual or small business bankruptcy in Indiana, it can be helpful to review the way the bankruptcy system works. (Even clients of the five Zuckerberg bankruptcy law offices find referring to the articles helpful as they gather information for their bankruptcy petitions.)  

On the uscourts.gov website, the most important term on the “M” page of the glossary is “Means test”.  The means test is a way of looking at “the debtor's aggregate current monthly income, net of certain statutorily allowed expenses”, to see whether he or she qualifies to file bankruptcy Chapter 7.

There are actually two M’s that are important – the means test itself, and the median income standard for each location. The first thing about the Indiana Bankruptcy Court means test is, the court looks at your monthly income during the previous six months, to see if it’s above or below the median income for a household the size of yours in Indiana. Congress has set out special definitions of “disposable income”, “current monthly income”, “expenses”, etc., so the means test is not a do-it-yourself process. There are a lot of different factors to consider and many details to know about how to fill out the forms. That's a big part of the work I have done over more than 26 years as a bankruptcy attorney in Indiana.

In fact, April 1st of this year saw some big changes in the income numbers the court uses to measure who qualifies to file personal bankruptcy in Indiana and what kind. The U.S. Bureau of Labor issued new guidelines that went into effect 4/1/13. These are median family income numbers by state.

For Indiana, the median annual income for a one-earner family is now $42,089. For a two-person household, the new median income number is $52,618; for a household of three, it’s $58,916, and for four people, it’s $70,763. For each extra person after that, $8,100 can be added to the median income figure. When I compare these numbers to the November, 2012 chart, for example, each is up around $800.

The whole idea behind these median income numbers is that the more people that must be supported, the greater the number of dollars that must go toward paying expenses rather than paying off the debts.

The M & M’s of Indiana bankruptcy law  are designed to offer a chance at a fresh financial start for honest debtors, while being as fair to creditors as possible!
 

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This post was written by Mark Zuckerberg

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