Beginning November 1, 2011, filing an Indiana bankruptcy will become more expensive.  The Judicial Conference has increased the fees for filing both a Chapter 7 bankruptcy and Chapter 13 bankruptcy as well as increasing fees for a variety of other bankruptcy related filings.  A complete list of fee changes can be found at the United States Bankruptcy Court Southern District of Indiana’s web site.   Consult with an Indianapolis bankruptcy attorney to see how the change in fees could affect your bankruptcy filing.

More importantly, November 1, 2011, also brings changes to the Means Test calculations.  Kainrath Law Firm, P.C. previously posted a blog on October 9, 2011, on the topic of Bankruptcy Qualification and Means Test.  To summarize, the Means Test is used to determine whether a debtor qualifies for a Chapter 7 bankruptcy or to determine whether a debtors Chapter 13 bankruptcy will be a 3 or 5 year payment plan.  Whereas prior to November 1, 2011, a single debtor with no dependents wanting to file a Chapter 7 bankruptcy needed to have a gross income that averaged $3,345 or less per month over the last 6 months which comes out to an annualized $40,135 per year.  A two person household needed to average $4,259 or less per month over the last 6 months or $51,104 per year.  A household of 3 needed to average $4,919 or less per month or $59,028 per year and a household of 4 needed to average$5,769 or less per month or $69,226 per year.  Every additional person in the household allowed for an increase of $625 per month or $7,500 per year.

The new numbers for those filing bankruptcy after November 1, 2011, are for a single person household $3,332 or less per month or $39,987 annualized per year.  For a two person household $4,139 or less per month or $49,669 per year. A household of three needs to average $4,808 or less per month or $57,696 per year and a four person household needs to average $5,608 or less per month or $67,296 per year.  Each additional household member still allows for an increase of $625 per month or $7,500 per year.

What this means is that it is now more difficult to qualify for a Chapter 7 bankruptcy or to be in a 3 year Chapter 13 bankruptcy plan because the amount of money that your household is allowed to earn in order to qualify for those has decreased.  However, it still may be possible to qualify for a Chapter 7 bankruptcy even though your household income is above the Means Test income limits.  For those debtors who believe that they may make too much money to file a Chapter 7 bankruptcy it’s important to speak to a knowledgeable bankruptcy lawyer to see if your particular situation may allow you to still qualify.

The first question that most people who are unfamiliar with bankruptcy have is, “How do I know if I qualify for a bankruptcy?”  The answer is that almost everyone qualifies to file either a Chapter 7 or a Chapter 13 Bankruptcy.  A better question is, “Do I qualify for a Chapter 7 Bankruptcy?” 

To begin with, let’s discuss the timeline qualification. A Chapter 7 Bankruptcy can be filed only once every 8 years.  So if it hasn’t been 8 years since the date that you filed your last Chapter 7 Bankruptcy then you must file a Chapter 13 Bankruptcy. If the last bankruptcy you filed was a Chapter 13 Bankruptcy and you received a discharge, 6 years must have passed from the Chapter 13 filing date before you can file a Chapter 7 Bankruptcy. However, if for some reason you never received a discharge in a previously filed bankruptcy, then you should consult a Bankruptcy Attorney to determine if you can file again. 

Assuming that you meet the timeline requirements, the next step is to determine if you qualify under the Means Test.  The Means Test is designed to determine whether you meet the income requirements to file a Chapter 7 Bankruptcy or to determine how long your Chapter 13 Bankruptcy will last.  The income levels to file bankruptcy in Indiana change periodically, but as of the date of this post, a single person with no dependents and lives by him/herself must make under $40,105 annually, a two person household’s income must be under $51,104, a three person household’s income must be under $59,028 and a four person household’s income must be under $69,226.  The income limit continues to increase with each additional person in the household.  If you are filing a Chapter 13 Bankruptcy and are over the Means Test income limit then you will be in a five year bankruptcy instead of the three year bankruptcy that you would be in if you were under the income limit. In general, if you are over the income limit then you are excluded from filing a Chapter 7 Bankruptcy; however, if you are close, you should consult with a knowledgeable Bankruptcy Lawyer to see if an exception may apply to your situation.