How Does Income Impact Bankruptcy in Minneapolis, Minnesota
When you first speak with an attorney about options for filing bankruptcy, you should know an average of your income or your hourly rate, or at least a best estimate of your income. Income is important, because it can determine which bankruptcy you will file.
When you file bankruptcy, you need to list the income for your household for two reasons. First, your attorney will go through what is called the means test. This is where your gross income is averaged out over the last 6 months, to see what type of bankruptcy you qualify for. If you are over the median income for your state and household size, you cannot file a Chapter 7, and you cannot file a 3-year Chapter 13 bankruptcy unless you meet certain qualifications. You could then look at filing a chapter 13 five year bankruptcy. Second, your income is projected and expenses are looked at to determine disposable income for your household. If you have disposable income, you may need to look at filing a chapter 13 vs a chapter 7.
The median income numbers your attorney will use for the means test change periodically; currently, in Minnesota, they are: Household of 1 $72,319; household of 2 $93,855; household of 3 $117,426; household of 4 $141,903. If your household size is more than 4, you would add $9,900 for each individual in excess. The median income varies by state.
If you are self-employed, your attorney will likely have you provide profit and loss statements (if you have them) and a breakdown of income over at least the last six months.
Typically, your attorney will request at least six months of paystubs or six months of self-employment income and taxes to verify how much you make and complete the means test.
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