Explain Median Income Test with an Example

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The Answer is The first step in determining whether a debtor qualifies for Chapter 7 relief is to apply the median income test.A state's median income is defined as that income where half of the state's families of a specified size have incomes above that figure and half of the state's families of that size have incomes below that figure.If a family has median family income equal to or below the state's median family income for the size of the debtor's family,the debtor qualifies for Chapter 7 bankruptcy.The debtor may proceed with his or her Chapter 7 case and be granted discharge of his or her unsecured debts.For instance,a state's median income for a family of four is $80,000 and the median income of the debtor's family of four is $70,000,the debtor automatically qualifies for Chapter 7 bankruptcy relief.

Explain Median Income Test with an Example

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Explain Median Income Test with an Example

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Correct Answer:
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