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- The means test limits the use of Chapter 7 bankruptcy to those who can't pay their debts by testing whether you have enough income to repay creditors. If you don't, you'll pass. Here's how it works. You'll start by determining if your "current monthly income" is more or less than your state's median income for your family's size.
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The biggest barrier to qualify for Chapter 7 relief was added to the bankruptcy code in 2005 -- this is the means test. The means test looks at your income and expenses and kicks you out of Chapter 7 if the numbers don't fit within certain guidelines.
- The Bankruptcy Means Test
If you file a Chapter 7 bankruptcy, and your debt is...
- Chapter 7 Means Test
Before receiving debt forgiveness in Chapter 7 bankruptcy,...
- The Bankruptcy Means Test
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How does the means test work in Chapter 7 bankruptcy?
What is the Chapter 7 means test?
Who is exempt from a Chapter 7 means test?
How do I qualify for Chapter 7 bankruptcy relief?
- How Does The Chapter 7 Means Test Work?
- Is Your Means Test Income More Than The median?
- Do You Have Enough Disposable Income to Repay Some Debts?
- Use The Chapter 7 Means Test Forms
- If You Pass The Chapter 7 Means Test
- If You Don't Pass The Chapter 7 Means Test
- Need More Bankruptcy Help?
The means test limits the use of Chapter 7 bankruptcy to those who can't pay their debts by testing whether you have enough income to repay creditors. If you don't, you'll pass. Here's how it works. You'll start by determining if your "current monthly income" is more or less than your state's median income for your family's size. "Current monthly i...
The first step is simple: If your current monthly income is less than the median for a household of your size in your state, you pass. You're done and don't need to complete the rest of the means test. You can file for Chapter 7. Median income levels vary by state and household size, so check the appropriate chart on the U.S. Trustee Program websit...
If your household income exceeds the state median, the means test computations will be more complicated. You must determine whether you have enough income remaining after paying your allowed monthly expenses or "disposable income" to pay off at least a portion of your unsecured debts, such as credit card bills. However, don't expect to deduct your ...
If you're looking for a way to determine your eligibility under the Chapter 7 means test, try filling out the means test forms. Fillable, downloadable forms are available online on the U.S. Bankruptcy Court's website. Follow the user-friendly instructions. Here's where you'll start: 1. Form 122A-1. The first means test form, Chapter 7 Statement of ...
You should be aware that passing the means test doesn't automatically qualify you to file for Chapter 7 bankruptcy. Another step exists. The court will look at two additional forms: Schedule I: Your Income and Schedule J: Your Expenses. If these two forms show you have enough remaining to pay something to your creditors, the court might convert (sw...
Consider using Chapter 13 bankruptcy. It requires you to make monthly payments over a three- to five-year period according to a strict budget monitored by the court. Although most people who file for bankruptcy prefer Chapter 7, Chapter 13 bankruptcy is still the best way to handle specific problems, like catching up on a mortgage payment so you do...
Did you know Nolo has been making the law easy for over fifty years? It's true—and we want to make sure you find what you need. Below you'll find more articles explaining how bankruptcy works. And don't forget that our bankruptcy homepageis the best place to start if you have other questions! We wholeheartedly encourage research and learning, but o...
- Cara O'neill, Attorney
Apr 25, 2023 · Before receiving debt forgiveness in Chapter 7 bankruptcy, you must prove your income is low enough to pass the Chapter 7 means test. This article walks you through the process of calculating your income and comparing it to your state's median income figures.
- Family median income figures are published for all 50 states several times per year (so you’ll want to check for the most recent figures). To compa...
- You can find the most recent family median income at the website of the U.S. Trustee at https://www.justice.gov/ust (select "Means Testing Informat...
- To find out who is included in your household size for purposes of the means test, see Household Size and the Chapter 7 Means Test.
- The figures in the Median Family Income chart change about regularly, so be sure you are using the most recent chart. You can pretty much rely on t...
You can maximize your chance of passing the means test by knowing how the Chapter 7 means test works, such as the following: whether you're exempt from the bankruptcy means test. how to calculate whether you'll pass the means test, and. how to avoid Chapter 7 means test mistakes.
Qualify for Chapter 7 Bankruptcy by Passing the Means Test. Many bankruptcy debtors must pass a "means test" to qualify for Chapter 7 bankruptcy. The means test is designed to determine whether you have "the means" (the ability) to pay at least a portion of your unsecured creditors, like credit card issuers and bills from doctors. .
You'll qualify for Chapter 7 bankruptcy if you are able to pass the "means test," and you'll pass if you can show that your gross income is less than the state median for a family the same size as yours (double the amount you've made over the last six months before comparing the figures).
If you're looking for an easy way to determine your eligibility under the Chapter 7 means test, use our online means test calculator, created by the author of Nolo's book How to File for Chapter 7 Bankruptcy, Albin Renauer, J.D.