A major part of the bankruptcy reform laws in 2005 was the implementation of the "means test" which determines whether a debtor is able to qualify for chapter 7. The starting point of the means test is to determine your "current monthly income", or "CMI". If your CMI is above the median for the state you file your bankruptcy in you will be subject to the entire means test to determine if you are eligible for chapter 7.
Currently, the median income in Oregon is:
$42,495 for a household of 1;
$56,019 for a household of 2;
$62,832 for a household of 3;
$72,667 for a household of 4;
$79,567 for a household of 5;
$86,467 for a household of 6;
$93,367 for a household of 7;
$100,267 for a household of 8;
If your household is larger than 8, add an additional $6,900 for each member over and above $100,267.
An important note is that household income is based on a GROSS income amount. That is, the amount you earn before any taxes or other deductions are taken out of your pay.
To arrive at your "CMI" amount, you take your total gross income for the prior 6 months before you file, total it up, and multiply by 2.
The month you file in does not count for the means test, it begins with the month before you file and goes back 6 months. For example if your filing date is going to be in February, the 6 months that would count would be August through January. If you file your bankruptcy in August, the months that count are February through July.
Wages are not the only income that counts in this calculation. Any source of income counts, including gifts and non-taxable income.
Remember that just because your income is above the median you can still qualify for chapter 7 in Oregon. We have several clients who have income above the median for their household size and are able to pass the means test and proceed with a Chapter 7.
For more bankruptcy information and also to learn more about our firm visit www.pacificbankruptcy.com.