The Means Test in Colorado Bankruptcy

 In Bankruptcy

The Colorado bankruptcy means test is a starting point to understand whether a person with consumer debt can file for a Chapter 7 bankruptcy or needs to file for a Chapter 13 bankruptcy. People who primarily have business debt and veterans in some cases can be exempt from the income means test. The Department of Justice publishes the median income in each state according to family size, and the median income is recalculated several times throughout the year. In Colorado, the current median income, which will change soon, is as follows:

Family Size                         Income

1                                           $61,921

2                                           $81,155

3                                           $94,193

4                                           $107,867

*Add $9,000 for each individual in excess of 4

The median income includes the spouse’s income even if the spouse is not filing. The family size will include dependents in most cases but will generally not include roommates or non-dependent family members. If the combined income is under the median income for the state a Chapter 7 bankruptcy is possible. If the combined income is higher than the median income for the state, then the presumption of abuse applies. The presumption of abuse sounds worse than it is, and a Chapter 7 bankruptcy filing may be still be possible either by showing special circumstances or by deducting certain allowable expenses pursuant to the IRS’s national and local standards. Certain secured debts and priority debts can also be deducted. If the IRS’s allowable expenses and other expenses do not allow for a Chapter 7 bankruptcy filing then the debtor will be limited to filing a Chapter 13. Keep in mind that even if a Chapter 7 filing is possible, a Chapter 13 might be the best option in certain circumstances. The Colorado bankruptcy means test can be very complicated especially for a bankruptcy filer who is slightly over the median income. An experienced bankruptcy attorney can help you determine whether or not you pass the income means test and which bankruptcy chapters are possible given your unique circumstance.

Call us today if you have any questions about the Colorado Bankruptcy means test.

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