What Is The Means Test As It Relates To Bankruptcy Cases?

A means test is a formula set by Congress to determine whether or not a debtor has the ability to pay back their debt.

Is The Means Test Only Used To Qualify For Chapter 7 Bankruptcy Or Is It Used For Chapter 13 Bankruptcy As Well?

The means test is for both Chapter 7 and Chapter 13 but is primarily used in the Chapter 7 to determine whether you are able to file a Chapter 7 or if you need to file a Chapter 13. In a Chapter 13, it’s used primarily to determine the length of the repayment plan.

What Are Income Requirements To Pass The Means Test?

The income requirements for the means test depend on the number of people in your household, as well as the number of dependents. They look at that to determine the amount of money that you can make in order to pass the test. For example, if it was one person, as of April of 2018, you are entitled to make up to $48,596. If you happen to have five people in your household, that would jump up to $93,694. The numbers are adjusted periodically.

How Do You Factor My Children In The Means Test?

Children are part of the determination of the household size. The more children you have, the higher the income can be to allow for the Chapter 7 to be acceptable.

What Expenses Are Allowed In The Means Test?

First of all, if you are below the allowable income level, you don’t have to worry about expenses. If you are above the allowable income level, then there is a series of questions regarding expenses. All expenses under the formula are taken into consideration to see whether you have enough expenses to still allow you to file a Chapter 7, even if you are over the income limit.

What Is The Marital Deduction Adjustment?

If an individual is filing bankruptcy without their spouse, then certain taxes, payroll deductions, debts, etc. that the spouse has can be a marital deduction, so the trustee can take that into consideration to determine whether or not a Chapter 7 is appropriate.

What Do I Do Next In Filing For Bankruptcy If I Pass The Means Test?

If you have passed the means test, next you would meet with your bankruptcy attorney to start the process of gathering documentation. Your attorney will prepare the legal forms and have you review and sign them. You will then be required to take the credit counseling course.

If I Fail The Means Test For A Chapter 7, Can I Still File A Chapter 13 Bankruptcy?

Many times the Chapter 13 is used because a person failed the Chapter 7 means test. Chapter 13 is a fallback so that you are able to reorganize your debts and not get stuck paying each creditor back in full.

For more information on Means Test In a Bankruptcy In Ohio, a free initial consultation is your next best step. Get the information and legal answers you are seeking by calling (937) 247-6447 today.