Babies and Bankruptcy

You start with the analysis that your income must fall normally fall below the state median income to qualify to file a Chapter 7 Petition in bankruptcy. 

Here's the link to a chart that lists the state median incomes.

Click here: U.S. Trustee Program/Dept. of Justice . 

For example, in the state of New Hampshire, a one-person household would earn less than $51,500 annually to qualify for Chapter 7, a two-person household would earn less than $61,679 to qualify for Chapter 7, a three-person household would earn less than $79,349 to qualify and a four-person household would earn less than $91,750 to qualify to file a Chapter 7 petition in bankruptcy (and, add $7,500 for each additional person for households larger than four persons).

A while back, a very nice couple, Mr. and Mrs. X,  with one small child, sought the relief that a Chapter 7 petition in bankruptcy would afford them.  However, their income was a bit over the state median, and even with the application of the "means test" (this is the second level of analysis to apply if your income is above the state median, to determine if you may still qualify for a Chapter 7 case) the clients' combined family income still prevented them from filing Chapter 7.  When this was explained, Mrs. X grinned and said baby #2 was on the way, and the median income issue would shortly be resolved as they would soon be changing from a 3-person to 4-person household!