What Is the Mean Income in Texas for Chapter 7 Bankruptcy?

Means Testing

Before you can file for any chapter of bankruptcy in Texas, you must complete bankruptcy form 22A. This form is known as the means test. The means test requires that you use your income and expenses to come up with your yearly income and monthly disposable income. The means test determines whether you should be able to pay your debts or whether your income would be insufficient to pay your debts. If the means test proves that you bring in enough income to pay your debts, it is presumed that you are trying to abuse the bankruptcy system.

First, you compare your family income with the median family income for a family of the same size in Texas. Take your total income for the six months prior to filing for bankruptcy and multiply that number by two to get your family income. The Census Bureau has listed Texas median incomes as follows: $37,676 for a single earner; $54,288 for a family of two; $54,534 for a family of three; and $64,420 for a family of four. These figures change periodically. Consult the U.S. Department of Justice website for any changes.

If your family income is less than the median family income for a family of the same size in Texas, there is no presumption of abuse. You can then file for Chapter 7 bankruptcy. If your family income is more than the median family income for a family of the same size in Texas, you need to calculate your monthly disposable income to determine whether there is a presumption of abuse.

Monthly income minus allowable monthly expenses equals monthly disposable income. Multiply your monthly disposable income by 60 to come up with your projected repayment capacity. If you have $24,000 or less of nonpriority unsecured debt, a presumption of abuse arises if your projected payment capacity is at least $6,000. If you have between $24,000 and $40,000 of nonpriority unsecured debt, a presumption of abuse arises if your projected repayment capacity is between $6,000 and $10,000. If you have more than $40,000 in nonpriority unsecured debt, a presumption of abuse arises if your projected repayment capacity is at least $10,000.