New Means Test Amounts - Effective April 1, 2024

The U.S. Department of Justice has published new median, gross annual income data for use in bankruptcy cases filed on or after April 1, 2024. For Minnesota residents, the figures have increased, making it more likely that you will qualify for Chapter 7 relief.

Here is how much the median amounts will increase in Minnesota from numbers used in cases filed after April 1, 2023:

  • One person household: $72,319

  • Two person household: $93,855

  • Three person household: $117,426

  • Four person household: $141,903

The increase for additional household members above is $9,900. NOTE: these figures can and likely will change in the future so please make sure you are relying on the most current information when attempting to calculate means test eligibility.

A reminder: the median income amounts are only part of the analysis for determining whether you qualify for Chapter 7 relief. Calculating the amount is based primarily on your gross income for the six months prior to your month of filing. But you can sometimes be over the amount and still qualify after completing the full, long-form means test. How to count household income can be tricky as well, depending on sources (social security benefits do not count, for instance) along with the amounts that are contributed by other household members.

As always, consultation with a qualified, experienced bankruptcy attorney is critical. But if you're struggling with debts, starting next month it may be a little easier for you to qualify for relief.

About the author: Dan Cooke

Bankruptcy Means Test Amounts - Effective November 1, 2023

The U.S. Department of Justice has published new median, gross annual income data for use in bankruptcy cases filed on or after November 1, 2023. For Minnesota residents, the figures have increased, making it more likely that you will qualify for Chapter 7 relief.

Here is how much the median amounts will increase in Minnesota from numbers used in cases filed after April 1, 2023:

  • One person household: $69,460

  • Two person household: $90,144

  • Three person household: $112,783

  • Four person household: $136,293

The increase for additional household members above is $9,900. NOTE: these figures can and likely will change in the future so please make sure you are relying on the most current information when attempting to calculate means test eligibility.

A reminder: the median income amounts are only part of the analysis for determining whether you qualify for Chapter 7 relief. Calculating the amount is based primarily on your gross income for the six months prior to your month of filing. But you can sometimes be over the amount and still qualify after completing the full, long-form means test. How to count household income can be tricky as well, depending on sources (social security benefits do not count, for instance) along with the amounts that are contributed by other household members.

As always, consultation with a qualified, experienced bankruptcy attorney is critical. But if you're struggling with debts, starting next month it may be a little easier for you to qualify for relief.

About the author: Dan Cooke

New Means Test Amounts - Effective April 1, 2023

The U.S. Department of Justice has published new median, gross annual income data for use in bankruptcy cases filed on or after April 1, 2023. For Minnesota residents, the figures have increased, making it more likely that you will qualify for Chapter 7 relief.

Here is how much the median amounts will increase in Minnesota from numbers used in cases filed after April 1, 2023:

  • One person household: $71,643

  • Two person household: $90,946

  • Three person household: $114,267

  • Four person household: $141,324

The increase for additional household members above is $9,900. NOTE: these figures can and likely will change in the future so please make sure you are relying on the most current information when attempting to calculate means test eligibility.

A reminder: the median income amounts are only part of the analysis for determining whether you qualify for Chapter 7 relief. Calculating the amount is based primarily on your gross income for the six months prior to your month of filing. But you can sometimes be over the amount and still qualify after completing the full, long-form means test. How to count household income can be tricky as well, depending on sources (social security benefits do not count, for instance) along with the amounts that are contributed by other household members.

As always, consultation with a qualified, experienced bankruptcy attorney is critical. But if you're struggling with debts, starting next month it may be a little easier for you to qualify for relief.

About the author: Dan Cooke

New Standards Announced for Discharging Federal Student Loans in Bankruptcy

The U.S. Department of Justice announced that it will be using a new process to determine whether to oppose the discharge of federal student loans in bankruptcy.

What this means is that if you have student loan debt, you may have a better shot at eliminating it as part of a bankruptcy filing. If you have federal student loans and you are struggling to pay them, it may be time to consider bankruptcy as a solution. The process will still be somewhat complex and will require a separate “adversary proceeding” after the standard bankruptcy paperwork is filed. But with the help of a competent lawyer, you might want to consider this as an option.

Feel free to contact my office for a free consultation where we can discuss your student loans along with any other debt issues you may have.

About the author: Dan Cooke

Image credit: Mary Pahlke

Student Loan Forgiveness Announced

Specifics have yet to be released, but the Biden administration announced executive action to forgive federal student loan debts for millions of Americans.

What we know so far is that individuals whose 2020 or 2021 income was below $125,000 (or under $250,000 for married persons who filed joint tax returns) will be eligible for up to $10,000 in forgiveness and an additional $10,000 in forgiveness for Pell Grant recipients. Reportedly, the application form will be released within the next “few weeks”.

Stay tuned for more details on the application and qualification process. This will have implications for those considering bankruptcy or who have student loans and have filed bankruptcy or plan to do so.

About the author: Dan Cooke

How to use Chapter 13 to Save your Home

When you fall more than a few months behind on your mortgage payments, you may receive a foreclosure warning letter in the mail. This begins a process that can lead to the loss of your home - and potentially all of the home equity you’ve built up during the recent rise in home prices.

A Chapter 13 bankruptcy can be a great tool to protect your home. How can this be? Doesn’t the lender have a lien on the house? Liens are not discharged in bankruptcy, right?

Lenders do keep their mortgage liens even if you file for bankruptcy protection, BUT in a Chapter 13 case they normally cannot foreclose so long as you keep up with your promises in your approved Chapter 13 payment plan. What is a Chapter 13 payment plan? Simply put, it is a plan where you agree to make a payment each month to a “bankruptcy trustee” (and you normally can set this up as an automatic transfer from your bank account). You can think of this as a catch-up payment where the funds will be used to pay your mortgage lender for the amount of your past-due mortgage payments.

Yes, you’ll end up paying more each month to get caught up because you’ll need to also make your regular monthly mortgage payment on top of the catch-up payment. But if you can afford to do this, Chapter 13 can be a great way to avoid foreclosure and protect your home.

A Chapter 13 payment plan will be subject to review by the bankruptcy trustee’s office and by the mortgage lender. One of the trustee’s concerns will be whether your proposed payment plan is “feasible”, meaning that you can actually afford the payments on your current budget. And mortgage lenders will often present updated statements showing additional fees or charges while you fell behind on the loan. There can also be the matter of catching up on any missed property tax payments, especially if those were not paid on your behalf by the mortgage lender.

That said, we can help you sort out whether Chapter 13 might work to help you save your home before you commit to anything. If you or someone you know is falling behind on mortgage payments, you may consult with us for free by calling 612-721-0230.

About the author: Dan Cooke

Image credit: Nattanan Kanchanaprat