We have new numbers! The new income figures for California bankruptcy cases used in bankruptcy’s means test are out.
They become effective for cases filed after November 1, 2019.
The new median income numbers won’t create the same stir as the Powerball jackpot, but they are the starting place for people in need of relief from bills they can’t pay.
The means test divides debtors (the people who need debt relief) into two groups.
Those below the median state income get to file bankruptcy, no questions asked.
Those above the median income have to jump through another hoop, the means test, to determine if a government watchdog will claim their filing is “abusive”.
People above the median still get to file bankruptcy.
The means test doesn’t bar the door to bankruptcy. It just influences which chapters are available and what the debtor has to pay if they elect Chapter 13.
Bay Area median income
The means test looks at the median income by family size. The median for families in San Mateo, Santa Clara, Alameda, and Santa Cruz counties is
- $59,286 for a family of one
- $77,860 for a family of two
- $86,665 for a family of three
- $99,512 for a family of four
For families larger than four, the median is increased by $9000 for each member above four.
While the median income figures are the same for all Bay Area counties, the deduction allowed for housing varies from county to county. This table shows county by county how much a California debtor can deduct from their income for the cost of housing a family of their size.
If you are above median
Lots of people above the median income pass the second part of the means test with flying colors.means test post, the high cost of housing in the Bay Area makes it relatively easy to pass the test.
All Congress managed to do by imposing a means test on bankruptcy is to drive up the cost to debtors for filling out a tedious form.