The Pennsylvania median income is the primary factor in establishing whether a Pennsylvania debtor may file for bankruptcy under Chapter 7 or must instead file under Chapter 13. (The 2020 figures are below.) Although the PA median income is often called a Chapter 7 income limit, it is not quite that simple. A debtor whose income is below the Pennsylvania median income for the debtor’s family size is presumed to be eligible to file under Chapter 7. On the other hand, a debtor whose income is above the state median must take the Chapter 7 means test to determine whether he or she must file under Chapter 7 or Chapter 13.
The median income also bears on the length of time of any Chapter 13 plan. Debtors with earnings under the state median may enter a 36-month plan rather than a 60-month plan.
For bankruptcy purposes, the state median income is taken from U.S. Census Bureau data, which is posted periodically by the United States Trustee. The current Pennsylvania median income figures for 2020 are as follows:
*For each additional family member over six, add $9000. Applies to cases filed on or after May 1, 2020. Source: U.S. Census Bureau.
The median income rises and falls, depending on economic conditions. As a Philadelphia bankruptcy attorney, I witness the effects of this up-and-down cycle on people throughout the greater Philadelphia area every day. An increase is better than a reduction because a drop in the median means not only less household income for many families but also more debtors required to take the means test (if their income is above the median for their family size).
For more information on the role that the Pennsylvania median income plays in bankruptcy, see my posts Avoiding the Means Test and High-Income Chapter 7 Bankruptcy: Crossing the Threshold. You can find additional information about this subject on our main website and our Bankruptcy FAQ.
The median income for Pennsylvania is republished here for convenience only. It is always a good idea to review the current figures on the DOJ-U.S. Trustee website.