The United States Trustee’s Office, a branch of the United States Department of Justice, announced changes that may affect your right to file bankruptcy in Arizona.
Your right to file Chapter 7 bankruptcy depends on being able to show a financial hardship. If your income is below the median income for your household size that hardship is presumed.
You do not need to prove that you do not have sufficient income to pay a fair amount toward your debts when your income is less than the median income.
The United States Trustee’s Office published new median income numbers for bankruptcy purposes that took effect on November 1, 2011. Ironically, as the economy gets worse in Arizona it is becoming harder to qualify for Chapter 7 bankruptcy.
The new median income for a family of four in Arizona has been reduced by $5846. The new median income for a household of four, effective November 1, 2011, is $61,267.00. The current median income for households of four is $67,113. As a result, many people who qualified for Chapter 7 bankruptcy in Arizona in October 2011 now need to be prepared to prove a financial hardship in order to receive a Chapter 7 discharge.
This does not mean that if your income is over the median for your household size that you cannot receive a Chapter 7 discharge. A second step to the qualifying process is called the means test. The means test is essentially a budget form that deducts living expenses from your income.
However, the government has also published guidelines on what can be deducted for many expense items such as food, clothing and shelter. In order to deviate from these guidelines we need to be prepared to prove what is called a special circumstance.
An example of a special circumstance is medical expense. If you have significant medical expenses the bankruptcy law allows you to take the full amount of those expenses as a deduction on the means test. We will need to be prepared to prove the amount deducted. Other examples of special circumstances include education expenses child care expenses work-related expenses.
My job in helping you through the bankruptcy process is to help prove your eligibility for a bankruptcy discharge. We can do this by helping you identify and document the expenses that you have that will allow you to file a Chapter 7 case and receive a discharge despite an income that is over the median. We won’t be able to do this in every case, but when you are entitled to Chapter 7 relief, we will help you prove it.
