Unlike the last revision of Means Test numbers, the median numbers for all household sizes have gone up, some of them fairly significantly. This will help many debtors who want to file under Chapter 7 rather than getting into the long slog of a 5-year Chapter 13 Plan.
Here are the new Wisconsin median income numbers for cases filed on or after April 1, 2024.
One person household: $66,106 (increase of $2,614)
Two person household: $82,346 (increase of $3,256)
Three person household: $101,490 (increase of $4,013)
Four person household: $122,571 (increase of $4,846)
Add $9,900 for each individual in excess of four. (no change)
A debtor filing under Chapter 7 submits a Means Test to the Bankruptcy Court that provides annual income based on the debtor's gross income in the six calendar months prior to filing. In other words, take your income in the 6 calendar months prior to filing and multiply by 2 and that is the income that is compared to the above median income numbers. You must include all sources of income other than Social Security and military disability income. For example, wages, capital gains, business profits, Foodshare, unemployment, child support, gifts, blood plasma, and many other kinds of income are included. If the Debtor's income is below the above median numbers for their household size, they will almost always be able to proceed under Chapter 7. But, if it appears to the U.S. Trustee that the Debtor could afford to be in a Chapter 13 even though the Debtor passes the Means Test, then the U.S. Trustee may object to the debtor being able to get a discharge in a Chapter 7 case. In that case, the Debtor would usually convert to a Chapter 13 case. The Debtor does have the option of opposing the U.S. Trustee's objection, in which case, a bankruptcy judge would make a decision. If you are above the median income, it is possible to proceed under Chapter 7, but your Means Test would become much more complicated. Certain types of debts and expenses can be taken into account that could allow a debtor with an above median income proceed under Chapter 7. In my experience, debtors above median who are allowed to proceed under Chapter 7 are usually those with very large tax and/or child support debt. Means Test issues can be very complicated. If you have questions about the bankruptcy Means Test, call us at (608)718-0497.