A debtor intent on filing a chapter 7 bankruptcy has to be below the median income for the size of his household in the state he lives in or pass the means test. The median income figures are published by United State Trustee for each state. They publish the median income for each household size starting with single folks to families of four or more. For a debtor filing chapter 7 bankruptcy in Maryland they would have adhere to the Maryland guidelines. As one can imagine, each state has different guidelines as standards of living vary.
To determine, where he/she stands relative to the median income, the Maryland debtor has to determine his/her current monthly income as defined by the bankruptcy code. Under the code, Current Monthly Income is the average monthly income from all sources, taxable or non-taxable that the debtor receives during the 6-month period ending on the last day of the calendar month immediately preceding the date of the filing of debtor’s case. Therefore, debtor has to add all income received for the previous six months and take the average to determine his monthly income.
For a married debtor, the non-filing spouse’s income is counted towards the current monthly income. The debtor, however, is entitled to deductions for some of the non-filing spouse’s expenses.
This can be simple for salaried debtors and a little more challenging for those the self-employed.As a Maryland bankruptcy lawyer my approach is to request proof of all income for the 6-month period and discussing each aspect with the debtor during the interview. For most debtors it is as simple as pay stubs while self-employed debtors have to develop detailed profit and loss statements.
This is a general overview and is not meant as a comprehensive discussion. For this reason and others, it is always a good idea to speak with a knowledgeable Maryland bankruptcy lawyer to get answers specific to your situation.
Joseph K. Githuku
Maryland Bankruptcy Lawyer
Baltimore Bankruptcy Lawyer
Disclaimer: This article is provided for informational purposes only and should not be construed in any way as legal advice. This article does not create an attorney-client relationship.