The Means Test for Chapter 7

If you plan on filing for Chapter 7 bankruptcy you must first become familiar with means testing. This refers to federal laws that determine whether you are eligible for filing for Chapter 7 bankruptcy. It is meant to limit the amount of people who not only apply for but are granted this type of bankruptcy to only those who simply cannot pay back their debts.

One major determinant in the means test is your income. If you earn less than the median income for families in your state, as determined by Census Bureau statistics, you can still be eligible for Chapter 7 bankruptcy. However, if your income is above that amount you could still qualify for a Chapter 13 bankruptcy filing in your state.

If you do fall into the category of earning a wage higher than the median income it will then be determined as to whether your current disposable income will take care of your debts. Your average monthly income is calculated to not include your regular payments, such as mortgage or car payments. The amount left over is multiplied by sixty to see how much you could pay back over five years.

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