Why Is The Size Of Your Household Relevant In Bankruptcy?

Bankruptcy Attorney Dayton, Oh


If you want to file for bankruptcy protection one of the first things that a bankruptcy lawyer will ask is the size of your household. This is in addition to your debts, income, assets, and other relevant factors. Why is your household size important though? Does the bankruptcy court really need to know whether you have children in the home or if you take care of an elderly parent who lives with you? There is an important reason why you must disclose your household size, and this information is essential for the bankruptcy court. You must take the Means Test to determine whether you file a chapter 7 case or a chapter 13 case, and if you fail this test then you may need to pay off part of your debts before you can receive a discharge.


The Means Test examines your household income and expenses, and then determines whether you qualify as a low income filer or if you have any ability at all to pay something on your debts. This test is based on the size of your household as well as the income and expenses that you have. Larger households require more income on a monthly basis, and this is used to determine whether you are considered low income when your family size is considered. If your income is large and your household size is small then you will probably fail the Means Test and will need to file under chapter 13 of the bankruptcy code instead of chapter 7.


The bankruptcy court does not want to know who lives in your household to be nosy, there is a legitimate reason why this information is requested. Each state has certain income requirements that must be met before you can file for chapter 7, and the Means Test must also be passed before this chapter can be used. The family and household information is used to review your specific financial circumstances and decide whether you are low or high income. The 2 most important aspects on the Means Test are the household size and the household income. The median income level for each state is based on the household size and the household income. A higher number of family members will mean a higher median income level before you fail the Means Test and must repay at least a portion of most debt types.


Your household can consist of more than just a spouse and dependent minor children. A household takes into account everyone who lives in the home, the type of residence that is occupied, who pays the monthly bills, and who contributes income on a regular basis. Your dependents may be considered part of the household even if they share time between divorced parents. Going over all of your household information with a qualified bankruptcy attorney can help you understand what impact the size and income of your household may have on your bankruptcy case. This lawyer can offer advice on how to protect your property and eliminate debt as well.

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