Tag Archives: MeansTest

What Should I Know About The Chapter 7 Means Test?

Filing for Chapter 7 bankruptcy sometimes requires proof that a person does not have the means to pay back creditors, hence the name “means test.” How does a person know whether they qualify for Chapter 7 bankruptcy under the means test? The means test is two parts. When your total family income for a household of the same size is below the median rate for the state, you pass the Chapter 7 means test. If you are above the median rate, you must demonstrate how much disposable income you have on a monthly basis available to pay back a certain percentage of unsecured creditors. Monthly income includes wages and salary, state disability insurance, property income, workers’ compensation, and pensions. You then deduct all necessary household expenses and costs such as taxes, union fees, health insurance and other monthly expenditures from the last six months of income. The income left over…
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