Use the following table to help answer the question below.
| State | Single-earner | 2-person | 3-person | 4-person |
| :------ | :------------ | :------- | :------- | :------- |
| Florida | $41,226 | $52,259 | $58,574 | $69,009 |
| Georgia | $40,691 | $55,258 | $61,104 | $68,502 |
| Missouri| $39,645 | $51,568 | $60,371 | $71,059 |
| Texas | $38,940 | $55,859 | $59,222 | $66,381 |
| Virginia| $48,362 | $65,122 | $74,151 | $85,939 |
A family of 2 that has a monthly income of $4,650 is thinking about filing bankruptcy. In order to file for Chapter 7 bankruptcy, in which of the following states could the family be living?
A. Georgia or Florida
B. Florida or Texas
C. Georgia or Virginia
D. Virginia or Texas
Answer (2)
Calculate the family's annual income: $4650 \times 12 = $55800.
Compare the family's annual income to the 2-person income for each state.
Identify the states where the family's annual income is greater than the 2-person income listed in the table: Florida and Georgia.
Select the answer choice that includes only the states identified in the previous step: a
Explanation
Understanding the Problem We are given a table of incomes for different states and family sizes. A family of 2 with a monthly income of $4,650 is considering filing for Chapter 7 bankruptcy. We need to determine which states the family could be living in based on their income.
Calculating Annual Income First, we need to calculate the family's annual income. Since their monthly income is $4,650, we multiply this by 12 to find their annual income: 4650 × 12 = 55800
Comparing Income to State Thresholds Now, we compare the family's annual income of $55,800 to the 2-person income for each state in the table:
Florida: $52,259
Georgia: $55,258
Missouri: $51,568
Texas: $55,859
Virginia: $65,122
Identifying Possible States We need to find the states where the family's annual income is greater than the state's 2-person income threshold for Chapter 7 bankruptcy. This is because if their income is below the threshold, they are eligible to file. However, the question asks in which states could the family be living, implying we need to find the states where their income is above the threshold. Let's re-evaluate:
Florida: $55,800 > $52,259 (True)
Georgia: $55,800 > $55,258 (True)
Missouri: $55,800 > $51,568 (True)
Texas: $55,800 < $55,859 (False)
Virginia: $55,800 < $65,122 (False)
So, the family could be living in Florida or Georgia or Missouri. However, since Missouri is not an option, we consider only Florida and Georgia.
Final Answer Based on our analysis, the family could be living in Florida or Georgia. Therefore, the correct answer is a. Georgia or Florida.
Examples
Understanding income thresholds for bankruptcy can help families make informed financial decisions. For example, if a family is struggling with debt, knowing the income limits for Chapter 7 bankruptcy in their state can help them determine if they are eligible to file. This knowledge can guide them in seeking appropriate financial advice and exploring options for debt relief.
The family of 2, with an annual income of $55,800, could be eligible to file for Chapter 7 bankruptcy in the states where their income is below the 2-person income threshold. They fit the criteria for bankruptcy in Texas, Missouri, and Virginia. Among the answer choices, the correct option is D. Virginia or Texas.
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