Means Test in Bankruptcy

Seek Help from a Bankruptcy Attorney in Wayne County

The means test in a bankruptcy is the way to compare your income to the median income of your state. When filing for bankruptcy, your income is important for both Chapter 7 and Chapter 13 filers. For a Chapter 7, your income compared to the median is used as part of the means test. In Chapter 13, the comparison is important to the determination of your repayment plan. In order to compare your monthly income to the family median monthly income in your state, you would multiply your monthly income by 12 in order to find an annual average income. If you only have an annual income, divide it by 12 to make sure you have a monthly amount. Using either the monthly or annual income, compare the amount to the median of the state. If your income is lower than the median, you will most likely qualify for the means test. Qualifying for a means test allows you to file for a Chapter 7 bankruptcy. If your income is above the median for your state, you may not qualify for the means test. There are further calculations to be done beyond the simple income comparison.

If your income is above the median for the state, the means test is used to calculate a disposable income. This will take into account your expenses as well as your income. You would take an average income over a six month time period and then deduct your monthly expenses. The number left over is your disposable income and that will be used to determine if you are able to repay all or any part of your debt. If you cannot, you may still qualify for a Chapter 7 bankruptcy. If your disposable income shows that you are able to repay debts then you will most likely not qualify, but you can file for a Chapter 13 bankruptcy. If you have further questions regarding the means test, consult with a bankruptcy lawyer in Wayne County from Bryant Logan Law Group, PLC.

What if my family is large?

Large families may have an exception to this rule because there are larger expenses. If you have more than four members in your family, you are generally able to add a certain amount to the median income when making the comparison. The amount will vary but is generally around $7,500 per additional person in your family. Some families question how to determine who counts as a household member. There are not set rules to this but it is helpful to consider your household as a unit. If the persons in your unit depends on you for support then they are most likely a member.

Who counts as a household member?

Oftentimes, the court will use the Census to determine who is and is not part of the household. This definition includes: "all the people who occupy a housing unit as their usual place of residence." This would not only include children but also stepchildren and others even if they are not dependents. There are some courts, however that do not count people as members unless they are listed as a dependent on the tax return. There are other exceptions for children who may not live with you because they are in college but you financially support them. This whole process can be complicated, which is why having a skilled Wayne County bankruptcy lawyer by your side is beneficial.

Looking for a lawyer for your bankruptcy case in Wayne County? If you are considering filing for bankruptcy, contact Bryant Logan Law Group, PLC right away. Our firm may be able to help walk you through the means test and determine if you qualify for a Chapter 7 or Chapter 13 bankruptcy. We offer a free case evaluation so do not hesitate to give a Wayne County bankruptcy attorney from our firm a call today!