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How is the Median Income Significant in Bankruptcy?

By Ullian Associates of The Law Firm of Ullian & Associates, P.C. on May 28, 2015

Every couple of years, the Bankruptcy Court releases updated figures for the median income of families based upon their location and family size. Your bankruptcy attorney will ask you about how much income you and your spouse have earned in the last six months. Part of your bankruptcy petition is a formula, called the Six-Month Formula or the B22, which compares your income for the last six months to this median income of families of the same size in the same state. The results of this formula are important in two ways. First, only people whose last six months of income are under the median income are eligible to obtain a Chapter 7 discharge. If oyu are over the median income there is a presumption to you are not entitled to a discharge.

Second, if you are filing a Chapter 13 bankruptcy, then the Six-Month Formula may determine how much money you must pay to your unsecured creditors each month through your Plan. The formula determines how much "disposable income" you have each month.

The B22 formula can be complicated and may have a significant impact on your bankruptcy case, so it important to utilize a bankruptcy attorney who understands it and can explain it to you.

For more information on bankruptcy or to schedule your free consultation with The Law Firm of Ullian & Associates, P.C., contact us here.

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