Bankruptcy Means Test

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What is the bankruptcy means test?

The bankruptcy means test is a formula that determines whether your income is low enough to qualify for Chapter 7 bankruptcy.    The bankruptcy means test is intended to limit Chapter 7 bankruptcy to those unable to pay their debt.  The more disposable (leftover) income you have the more likely you’ll fail the means test and be precluded from filing Chapter 7 bankruptcy.  Most people that fail the means test file Chapter 13 bankruptcy and are required to repay some or all of their unsecured debt through a three to five year repayment plan.

How do you complete the bankruptcy means test? 

The first part of the means test is to determine whether your income is above the median income in your state.  If your income is below the median for your applicable household size you pass the means test without further inquiry.  If on the other hand your income is above the median you must complete the rest of the test by deducting certain expenses in determining your disposable income.  If your disposable income exceeds a certain limit you fail the means test.

Can I complete the bankruptcy means test myself?

The bankruptcy means test is a complicated formula with a number of variables.  It’s strongly recommended that you seek the advice of an experienced bankruptcy attorney in determining whether you qualify for Chapter 7 bankruptcy.  With that said, there are online calculators that help provide a guestimate as to whether you pass or fail the means test.

Please click on the following link for a free bankruptcy means test calculator.