Chapter 7 Means Test

: Reese Baker & Associates

  Filed under: Chapter 7

means testWhen you file for a Chapter 7 bankruptcy your eligibility will be determined by the Means Test. This test is to ensure that only the financially insolvent qualify for a Chapter 7 bankruptcy by reviewing the financial background of the debtor against a standard measure. The test criteria varies by state so it’s important to speak with Conroe bankruptcy lawyer about your eligibility before attempting to file for Chapter 7.

The Means Test

The idea behind the Means Test is to determine if there is sufficient disposable income that can be used to satisfy outstanding debt obligations. The test examines whether your income is above or below the median income of your state of residence. If you pass this criteria, meaning your income is below this threshold, you may be eligible to file for Chapter 7. If your income is above the median threshold you are likely to have to seek Chapter 13 instead.

While your income is the main determining factor in calculating your score that is compared against the threshold, the test does exclude certain types of income like Social Security or domestic support benefit payments. Generally, these types of income are not used as part of the calculation of your disposable income. The test also takes into consideration the total debt owed and the size of your household in its calculations, so don’t assume you won’t qualify for Chapter 7 based on your income alone. Always consult with a Conroe bankruptcy lawyer to ensure the most accurate calculation.