Median Income
For an individual to become a qualified debtor under Chapter 7, his/her income must be below the state median income level. Bankruptcy courts perform a test to determine if the individual’s income is below the median income, this test is called the Means Test. Median income level varies from state to state. Some examples of 2009 median income levels are: Alabama-$38,415, California-$48,140, Illinois-$46,105, Kansas-$41,357, Michigan-$43,611, Mississippi-$32,068, and Wisconsin-$42,356. Median income level changes based on the number of earning members in the family. The examples stated above are for families with a single earning member. In timely intervals the median income levels may be revised by the respective state agency.
An individual automatically qualifies to be a debtor under Chapter 7 if his/her average monthly income is lower than the state determined median income. Hence, the individual is not required to undergo the Means Test. If the individual’s average income is higher than the median income, then s/he is required to do meet the Means Test.
