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Qualifying Means Test in Chapter 7
13 Bankruptcy
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Debtors that have
predominately business debts are not requires to pass the Means Test to file a
Chapter 7. The Means Test
has two parts: First if your income is less than the average income for your
family size in your area then you automatically pass the means test and you can
file a Chapter 7 Bankruptcy these amounts increase yearly in April. Here are the
average family amounts for Kentucky. Most states have about the same means test
data.
Means Test chart
Income is determined by
the prior 6 months of income divided by 5 multiplied by 12.
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Family Size |
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3 |
52000 |
6 |
79,000 |
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1 |
39,000 |
4 |
64000 |
7 |
86000 |
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2 |
45,000 |
5 |
72000 |
8 |
94000 |
Second even if your income is greater than the average family income you may
still pass the means test and be able to file Chapter 7 bankruptcy if after
deducting for reasonable and necessary expenses there is about 150 or less in
disposable income left which will pay 10% back or more to your creditors.
The means test averages your prior 6 months of income to estimate your annual
income. It only presumes that your filing is in bad faith if you had high income
for the prior 6 months. Some facts such as a sudden disability may allow you to
file a Chapter 7 even if you fail the means test because a Chapter 13 may not be
feasible. If you have suddenly become disabled you only need to explain a
reason that allows you to file such as retirement or sudden disability.
The means test only forces consumers to file a Chapter 13. If over 50% of your
debt is business debt the means test does not apply to you. Some attorneys brag
that 95% of their clients file Chapter 13. Chapter 13 pays an attorney 3 times
the average Chapter 7 fee. Make certain that Chapter 13 works for you not your
attorney and that a Chapter 13 serves your goals. At the same time a Bankruptcy
requires that the debtor file in good faith and using their best efforts to
repay. If the disposable income is there the debtor must file a Chapter 13.
To file Bankruptcy: 1
Download our manual 2
Download the list of required documents
3 fill
out our online filing bankruptcy intake 4
Take your class 5
make your appointment
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