Pennsylvania Bankruptcy & SSI
Whether you file for Chapter 7 or Chapter 13 bankruptcy as an individual in Pennsylvania, you must take the means test. This determines whether you can file for Chapter 7 bankruptcy. The means test also determines your applicable commitment period if you file for Chapter 13 bankruptcy. You will use your income to conduct means testing with the exception of Supplemental Security Income.
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Purpose of SSI
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The federal government grants Supplemental Security Income to provide material needs of individuals and families, to give children the chance to grow up healthy and secure, to protect aged and disabled people from medical expenses that might eat up their finances, and to keep families together. Since the federal government awards this income to meet basic needs, it does not deprive you of these benefits by requiring you to consider them when preparing your bankruptcy case.
Means Testing
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To take the means test, add up all of your income, excluding SSI, for the six months prior to the date you plan to file your bankruptcy petition. Multiply the result by two. This gives you your family income. Compare your family income to the median income for a family of your size in Pennsylvania. As of 2011, Pennsylvania's median family incomes were $44,897 for a single earner, $53,706 for a family of two, $67,113 for a family of three, and $79,916 for a family of four. If your family income falls below these figures, you can file for Chapter 7 bankruptcy. If your family income hovers above these figures, you have to calculate your monthly disposable income to determine if you qualify for Chapter 7 bankruptcy.
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Monthly Disposable Income
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Calculate your monthly disposable income by deducting your monthly expenses from your monthly income. If your monthly disposable income rises above $166.66, you must file for Chapter 13 bankruptcy. The means test determines the applicable commitment period for your Chapter 13 case. Your applicable commitment period will be the length of time you will spend paying off your debts under a Chapter 13 debt repayment plan.
Bankruptcy Exemption
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Not only does the federal Bankruptcy Code exclude your Supplemental Security Income from use in the means test, but the code also excludes taking your SSI to pay your creditors in a Chapter 7 bankruptcy case. Section 522 of the code lists Social Security benefits as a bankruptcy exemption for each state, including Pennsylvania.
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