Passing the Bankruptcy Means Test

Ever since 2005 to be eligible to file Chapter 7 bankruptcy, you must pass the means test. To determine your eligibility, you will fill out the form “Statement of Current Monthly Income and Means Test Calculation.” This test will determine if your income is equal to or less than the median income in your state. Allowances will be taken for your region and family size.

States Median Income

If your income is less than your state’s median income, you will be able to choose between Chapter 7 or Chapter 13 bankruptcy. Chapter 7 is quicker and easier and all of your qualifying debt will be eliminated in three to six months. If you have a substantial amount of secured debt and would like to keep all of your assets, you may choose to file Chapter 13 bankruptcy instead.

Chapter 13

If you make less than your state’s median, your payment plan in Chapter 13 can be for three years. If you make more, the payment plan will last for five years. If your income is higher than your state’s median income you will be considered by the court to have enough money to pay your debts and will be required to file Chapter 13 bankruptcy instead.

If you would like more information about bankruptcy or the means test, contact a McAllen bankruptcy attorney.