california median income

California Median Income Reaches Historic Milestones

The California economy (until this week’s Coronavirus outbreak) is sitting pretty, and its citizens are earning income. The numbers used to qualify for a “straight bankruptcy” have broken some very notable milestones. Starting on April 1, 2020, the California median income for a household of one has broken the $60,000 threshold. The median income for a household of one in the Golden State is now $60,360.

Even more amazing, a family of four has a California median income of $101,315. This is the first time in recent memory, if ever, that a median household of four in Calif has earned six figures.

The significance of these numbers — $60,000 and $100,000 — applies to bankruptcy. The Department of Justice uses numbers from the Census as a preliminary measuring stick. They’re used to assess whether a debtor or debtors qualify for Chapter 7 bankruptcy. Not everyone is eligible, with the alternative being debt repayment with high income.  In theory, people earning $60,000 and $100,000 would ave a relatively easy time doing a bankruptcy and not repaying their debt.

See our median income article for a more thorough explanation. Also, you’ll find updated numbers, and the median income amounts used for other household sizes. The values change frequently, and by the time you read this page may have gone down due to COVID-19’s impact on the economy, so check that link for the latest amounts.

chapter 13 debt limits

Chapter 13 debt limits 2020

Chapter 13 Debt Limits, 2020

As you might know, Chapter 13 bankruptcy involves repaying some or all of your debt. People will sometimes ask, “do I qualify for chapter 13?” The answer, like to many legal questions is, “it depends.” One factor of many involves the Chapter 13 debt limits.

To qualify for Chapter 13, which is officially called a reorganization bankruptcy, a few things have to be looked at. First, a good Los Angeles bankruptcy attorney will examine your cash flow. That is, can you afford to repay your debts? Or are you struggling to keep your lights on?

Second, you have to compare your debts against the debt limits. These numbers constantly change. And to be honest, we bankruptcy lawyers have to look them up, since in most cases they’re not a factor. And just when we learn them, they change again.

So, the most recent numbers out there for the Chapter 13 debt limits 2020 are

  • Unsecured debt: $419,275
  • Secured debt: $1,257,850

These values took effect on 4/1/2019, and seem to be still be the most current. Normally, you’d check a government website for updated values. However, as of this writing, even the courts are still listing the chapter 13 debt limits that are from before 2019.

Even this is oversimplifying things, because where do lawsuits fall? That is, if someone has taken you to court, is it a secured debt or an unsecured one? What if you think you’ll win: does it count as a debt at all?

Another issue arises with student loans, particularly if you cosigned as a parent plus loan and it’s not really your debt. Or is it?

Further, tax debt is another tricky one. Is it unsecured, secured  or both? And what if it’s priority, can it also count against the unsecured debt?

There are a lot more issues that can arise, so you’ll want to consult with a skilled Los Angeles bankruptcy attorney who specializes in Chapter 13 bankruptcy.

2020 median income

2020 Median Income Limits for Bankruptcy Means Test

2020 Median Income Limits for Bankruptcy Means Test

The government recently updated the 2020 median income numbers. It again got easier to qualify for Chapter 7, because of another means test adjustment. The means test for bankruptcy decides who qualifies for Chapter 7 bankruptcy eligibility. The first step of this process is comparing your household income against the median income limits set by the Department Of Justice guidelines to see if you earn less than California median income limits. The means test limits adjusts.  So, someone may not qualify according to the means test in one month but after the changes they do, or vice-verse. The last updates were in November 2019, and are changing again with an April update. Here are the 2020 numbers to determine who can file Chapter 7.

Means Test: 2020 Median Income Adjustments

Every now and then, the government updates the median income limits. They last did it in November 2019. Good news: the California 2020 median income numbers are now even higher, increasing household income for bankruptcy means test qualifying. This means that more people could qualify for Chapter 7 bankruptcy using the California median income numbers below.

2020 Median Income for California Households

Because the California median income changes maybe once or twice a year, these recent changes late last year will be the latest numbers used for 2020 median income. You’ll see below there’s talk about household size. Notice also that larger families also get a break, as the amount for each additional member after 4 increases another $9,000. This is helpful for households of five people or more. It isn’t always clear who counts in a household. There may be a difference if you have a roommate who pays rent. What if you’re married? Or have kids but they’re adults. Do you live with your significant other, who has their own finances? They’re all in your household. Or, maybe they’re not. Call and let’s meet to talk about it. But below are the California median income limits for the various household sizes.

California household size and California median income for Bankruptcy
  • 1-person household: $59,286, but after April 1, 2020 it’s $60,360
  • 2-person household: $77,860, but after April 1, $79,271
  • 3-person household: $86,665, and after April 1, $88,235
  • 4-person household: $99,512, and after April 1, $101,315
  • Each additional person: $9,000

Read Our Means Test Guide.

 

 

2020 Median Income Isn’t Everything

A person can still file Chapter 7 bankruptcy, in some cases, even if they earn more than the median income. The bankruptcy means test would just need to be filled out completely. It’s still possible to qualify. However, even if someone isn’t eligible, there is still a way out in Chapter 13.

Finally, we don’t know the next time changes to the median income limits will happen again. So, be sure to check before relying on these California median income limits in the future.

CONTACT A LOS ANGELES BANKRUPTCY LAWYER TO SEE IF YOU QUALIFY

Sworn in President Hale Antico

Attorney Hale Andrew Andrew Named President

Attorney Hale Andrew Andrew Named President

Los Angeles bankruptcy attorney Hale Andrew Antico was named president of one of the nation’s largest groups of bankruptcy lawyers in late 2019. The CDCBAA, a group of Southern California bankruptcy attorneys, elevated and swore in Attorney Antico to lead the group at its annual Calvin Ashland Awards Dinner. It’s an honor to be chosen to lead such a talented and dedicated collection of bankruptcy professionals.

Below is Hale Antico’s first president’s message for the CDCBAA‘s January 2020 newsletter.


Happy new year, and allow me the word play of wishing you great “2020 vision.” As incoming President of the CDCBAA, it’s easy to see an organization that is vibrant, successful, and thriving.

This success is due, in large part, to past presidents, including my immediate predecessor, Roksana Moradi-Brovia. As her Vice-President the past two years, I was privileged to see up-close how much Roksana cares about the CDCBAA as evidenced by her contagious passion, enthusiasm, and tireless efforts on behalf of the organization. Roksana will remain on the CDCBAA board of directors, and continue helping provide the excellent programs to which we’ve grown accustomed.

With some recent hindsight, I look back at the success in November of the Calvin Ashland Award Dinner. The CDCBAA Trustee of the Year in 2019 was Howard Ehrenberg. Howard was introduced by a wonderful speech from Peter Anderson, the United States Trustee for Region 16. Howard himself gave an amusing but insightful address, where he highlighted the time-consuming, but often-fruitless search for assets in many offbeat types of cases which Chapter 7 trustees have the duty to perform. Our bankruptcy system relies on a balance of judges, trustees, and attorneys, each important for its smooth operation. Howard’s sense of professional courtesy, compassion, and fairness make him a key member of our community.

Looking around at the present, we see a bankruptcy landscape where filings remain down overall (28,861 new chapter 7 cases filed in 2019, just above the year prior), continuing a decade-long trend since the Great Recession. The CDCBAA is a valuable community of information-sharing, knowledge, and learning. Members can stay informed with important case decisions, news that affects consumer lawyers (both nationally and locally), and dive deeper in lesser-known areas of our specialty. The slowdown in filings creates an opportunity to invest time in the CDCBAA and to share knowledge with and learn from the community.  

Peering ahead into the future, 2020 is sure to be an exciting year. We are about to kick off the year with the always-popular Ninth Circuit Review of the prior year’s bankruptcy cases, and the James T. King Symposium coming up this summer, with other valuable programs in between. Later this year, we’ll honor a Judge of the Year, and I’m excited to see who this will be. But mostly, I look forward to the CDCBAA keeping a sharp focus on strengthening the bonds between the debtor bar and the judges and trustees, in elevating the practice of bankruptcy law, and keeping our goal of benefiting the consumer debtor who needs our help, truth, and compassion.

Hale Andrew Antico is President of the CDCBAA, and has practiced bankruptcy law in Palmdale and Santa Clarita for over 15 years.

Woman Facing Jail

Disclose, Disclose, Disclose: Woman Facing Jail for Bankruptcy Fraud

When you file bankruptcy, you’re signing a stack of papers under oath, and then you’ll be asked, under penalty of perjury, whether they list all your assets, income, and about any recent transfers. The wrong answer could land you in jail for bankruptcy fraud.

A woman in Michigan recently pled guilty to bankruptcy fraud. Wait, jail? Bankruptcy is just forms, right? Just before filing bankruptcy, she had received a $12,000 workers’ compensation award, then made it disappear, then lied about the whole thing. Now she faces five years in prison, $250,000 fine, or both.

The sad kicker is this: in California, this likely could’ve been avoided. Had everything been disclosed, and then properly exempted, she’d be free today, enjoying her discharge and money. Had she just told the truth to her bankruptcy lawyer, and then in the bankruptcy papers, a good Los Angeles bankruptcy attorney could have exempted the award, and she’d have it to spend when the bankruptcy is over.

By trying to save a few bucks on maybe the best bankruptcy lawyer, she’ll not only lose $12,000, but maybe twenty times that, and her freedom. Contact me today for a consultation, and let’s guide you to a honest fresh start.

 

California bankruptcy exemptions can save your house.

California Homestead Exemption

California Homestead Exemption – 2020 update

The California homestead exemption can help you save your home from creditors. Chapter 7 bankruptcy is liquidation; the bankruptcy trustee can take your stuff. They don’t take the shirt off your back, but at some point they draw the line regarding what you can keep. These are the bankruptcy exemptions, and each state has its own. The California exemptions include a way to protect some home equity.

There are two sets of California bankruptcy exemptions. Bankruptcy attorneys call these the 703s and 704s. The California homestead exemption is found in the 704s, at California Code of Civil Procedure 704.730.

The Three Homestead Exemptions in California

The California homestead exemption can save your house.
Don’t risk losing your house in Chapter 7. Talk to a experienced bankruptcy attorney about the bankruptcy exemptions and homestead exemption in California.

Firstly, there’s the bankruptcy exemption that a single homeowner gets. This is in subsection (a)(1). In 2020, a single person who lives in a house gets to protect $75,000 of home equity under the California exemptions.

Secondly, there’s a higher exemption for a married person’s residence. This is in (a)(2). The California homestead exemption for a married person is $100,000.

Finally, if you can tick one of three boxes, you get the superduper $175,000 homestead exemption in California’s bankruptcy exemptions. To level-up and qualify for this, you have to either be:

  • 65 years old;
  • have a disability that prevents gainful employment; or,
  • 55 years old, and make below a certain income level that changes from time to time

This may seem simple, but what is “disabled?” What is “as a result of?” What is the income level, and which time period is measured? You’ll want to speak to a qualified bankruptcy attorney in your area. But in the right circumstances, someone filing consumer bankruptcy can protect a lot more house equity under this third option.

Spouses Sometimes Count

A final note: a good thing about, in particular, the $175,000 California homestead exemption is that it extends to the spouse of the person filing Chapter 7. So if the debtor is, say, 63 years old, but their husband is 67 but really doesn’t want to file bankruptcy, the 63 year old who does file Chapter 7 bankruptcy gets the $175,000 homestead exemption in California anyway.

Be careful in Chapter 7 bankruptcy.  It’s not always the best type of bankruptcies.

Learn the differences between Chapter 7 bankruptcy vs 11 vs 13.

 

 

You really should talk to a qualified Los Angeles bankruptcy lawyer, as you get what you pay for, and it’s not worth risking your home. If you don’t do this right, you’re literally gambling with your house.

Joey Lawrence bankruptcy

Joey Lawrence Bankruptcy Ends

Joey Lawrence Bankruptcy Ends

Some actors from the 1990s show “Blossom” have gone on to fame and fortune. Mayim Bialik has struck gold on “Big Bang Theory.” Others like Joey Lawrence, not so much. Despite earning over $500,000 in 2015, he took home just $60,000 the next year. Joey didn’t cut back enough on spending, couldn’t keep up. In 2017 a Joey Lawrence bankruptcy was filed, claiming over $355,000 in debts.

Joey Lawrence bankruptcy
Joey Lawrence from Blossom

With all that half-million-dollars income in 2015, Joey Lawrence still qualified for Chapter 7 bankruptcy. How can that be, you ask? Apparently he could barely cover his 2017 overhead, and passed the bankruptcy means test for Chapter 7. Now, in 2018, the Joey Lawrence bankruptcy has ended.

The Chapter 7 trustee was able to liquidate over $75,000 in assets for the benefit of Joey Lawrence’s creditors. Often, taxes are priority debts and get paid first, before the other, nonpriority unsecured debts. In the Joey Lawrence bankruptcy, the IRS didn’t even get half its debt. The same goes for the Franchise Tax Board.

Chapter 7 Can Be Tough

Chapter 7 involves losing stuff, and while Joey apparently didn’t have income to repay his debts, he had things the Chapter 7 trustee could take. So that’s what happened, and after almost a year, his case is now over and he can move on with his life.

People think that Chapter 7 is always better, and sometimes it is. But each situation is different and there are times someone is better off in another of the types of bankruptcies.

Finally, we’re often shocked when a famous celebrity we assume is rolling in cash falls on hard times. But acting is a profession just like being an engineer, sheriff deputy, or registered nurse. It’s human nature to spend what we earn. However, when the overtime is gone or next acting gig doesn’t come, not everyone adjusts their spending. The Joey Lawrence bankruptcy is a example that could be any one of us.

2018 median income limits bankruptcy means test

2018 Median Income Limits Changed for Bankruptcy Means Test

2018 Median Income Limits Change for Bankruptcy Means Test

The means test decides eligibility for Chapter 7 bankruptcy. The Chapter 7 means test lets people file bankruptcy without having to repay their debts if they earn less than the California median income limits, or those in their own state. So, 2018 median income changes impact who qualifies, since it sets the bar for who can get into Chapter 7 bankruptcy.

Means Test: 2018 Median Income Adjustments

As the economy changes, from time to time, the government updates the median income limits used. As a result, on April 1, 2018, the DOJ started utilizing new 2018 median income numbers for the Chapter 7 means test.

The California median income numbers have increased for bankruptcy means-test takers. Consequently, many Californians should now have an easier time qualifying to file Chapter 7 bankruptcy.

California household size and California median income for Bankruptcy

  • 1 – $54,787
  • 2 – $73,162
  • 3 – $79,061
  • 4 – $91,349
  • add $8,400 each add’l person

Read Our Means Test Guide.


Just because a household earns more than the median income, it’s still not barred from Chapter 7 bankruptcy. The bankruptcy means test would just need to be filled out completely. It’s still possible to qualify. However, even if someone isn’t eligible, there is still a way out in Chapter 13.

Finally, we don’t know the next time changes to the median income limits will happen again. So, be sure to check before relying on this 2018 median income limits in the future.

 

credit after bankruptcy

Credit After Bankruptcy Discharge Doable – study from LendingTree

Credit After Bankruptcy Discharge Doable – study

Last week, LendingTree, the largest online lender, released study results about credit after bankruptcy discharge. It followed people after their case was completed. This is consistent with my article asserting that there is indeed credit after bankruptcy discharge.

credit after bankruptcy
Yes, Virginia, there is credit after bankruptcy.

The researchers learned that a credit score of 640 or more was achievable after bankruptcy:

  • one year after bankruptcy for 43 percent of borrowers
  • two years after bankruptcy for 65 percent of borrowers

In fact, the researchers concluded:

 

People recovering from a bankruptcy are in a similar position to anyone who needs to repair their credit standings. The study finds no indication that people in the aftermath of a bankruptcy will have a harder time accessing credit than their peers who did not file for bankruptcy (except for potential mortgage loan embargos caused by the Fannie Mae policy discussed above).  Some people may even find themselves in a much better position to recover, thanks to a reset of their debt-to-income ratios.

See also LendingTree’s pointers for how to rebuild credit after bankruptcy discharge. This validates everything we’ve been teaching people, and shows that even if you feel trapped by bad credit, a bankruptcy can provide the fresh start you need.