Median Income Adjustments

On May 1, the median income figures for Chapter 7 bankruptcy eligibility will be updated. The current figures through April 30, 2011, can be found here. The new numbers for Illinois are as follows:

Each additional household member beyond 4 will add $7500 to the median income ceiling. As a reminder, generally speaking, your median annual household income must be at or below the median to be eligible for a Chapter 7 liquidation bankruptcy. Your income is figured based the average of the 6 months prior to the month you file. This average number is then times by twelve to arrive at your annual income for purposes of the Chapter 7 “means test.” If you are above this median, you are probably still eligible for Chapter 13 repayment bankruptcy. This type of bankruptcy has advantages, such as cram down (where you only have to pay what something’s worth rather than was you “owe”) and lien stripping (which can eliminate the liens from junior mortgages in certain circumstances.