2019 Median Income Limits for Bankruptcy Means Test
[April 2019 update: there are new California median income numbers released, and the article below has been updated with them]
The 2019 median income numbers are out. It got easier to qualify for Chapter 7, because of a means test adjustment. The means test for bankruptcy decides who qualifies for Chapter 7 bankruptcy eligibility. Step one of this process is comparing your household income against the median income limits set by the DOJ to see if you earn less than California median income limits. The 2018 median income adjusts. So, someone may not qualify according to the means test in one month but after the changes they do, or vice-verse. These were announced in November 2018; they are the first 2019 median income limits.
Means Test: 2018 Median Income Adjustments updated in November
Every now and then, the government updates the median income limits. They just did it again in November 2018. Good news: the California 2018 median income numbers are now higher, increasing household income for bankruptcy means test qualifying. This means that more people could qualify for Chapter 7 bankruptcy using the 2019 median income numbers.
2019 Median Income for California Households
Because the California median income changes maybe once or twice a year, these recent changes in November 2018 will be the first numbers used for 2019 median income. You’ll see below there’s talk about household size. This isn’t always clear who counts in a household. There may be a difference if you have a roommate who pays rent. What if you’re married? Or have kids but they’re adults. Do you live with your significant other, who has their own finances? They’re all in your household. Or, maybe they’re not. Call and let’s meet to talk about it. But below are the California median income limits for the various household sizes.
California household size and California median income for Bankruptcy
- 1-person household: $57,962
- 2-person household: $77,167
- 3-person household: $84,003
- 4-person household: $96,813
- Each additional person: $9,000
First, this is not rigid. Just because someone earns less than the 2018 median income, it’s not certain they qualify for Chapter 7. Also, if someone earns over the California median income, it doesn’t mean they’re ineligible. This is just the starting point on a very long form. An experienced bankruptcy attorney can help someone who is over the median complete the bankruptcy means test and still file Chapter 7 in many situations.
Don’t fret if your income doesn’t make the cut; there’s still an option. Pay back a portion of your debt while freezing interest from accruing. Also, you get peace of mind by preventing lawsuits and wage garnishment. This is better than debt consolidation, and is called Chapter 13. And yes, it’s even better than paying minimums, since by just paying minimums you’ll never get out of debt.
Finally, bookmark this page and return often. While these numbers took effect in November 2018 as the first 2019 median income limits, they will change again. And if you found this helpful, contact me and let’s arrange a consultation in person or video if you’re anywhere in Los Angeles County. I specialize in fresh starts, with compassion.