Chapter 7 Bankruptcy Means Test: Income and Family Size

Related Ads

Completing the Bankruptcy Means Test is similar to filling out tax forms, but need not require an accountant’s help. Form B22A, the Statement of Current Monthly Income and Means Test Calculation, is the primary tool to determine eligibility for Chapter 7 bankruptcy. This form is commonly known as the Means Test. The Means Test determines whether disposable income is sufficient to meet financial obligations, depending on state of residence and number of dependents.

 Determining Whether Your Income is Less Than the Median Income for Your State

Form B22A first determines whether your income is more than or less than the median income for your state. To determine this, determine how many dependents you have. This includes all household residents plus children not living with you but you still support. If your income for your household size is less than the median income for your state, you are eligible for Chapter 7 Bankruptcy.

If Your Income Exceeds the Median Income for Your State

The second part of Form B22A calculates your disposable income if your income exceeds the median for your state. Living expenses, taxes, insurance, debt payments, and other obligations are calculated using IRS “standard amounts” for your family size and income level. Additional expenses, such as healthcare costs for an aging parent, are covered in the Additional Expense Deductions section.

Once standard and additional expenses are deducted, monthly disposable income determines eligibility for Chapter 7 bankruptcy. If disposable income is less than $100 per month, you qualify to file for Chapter 7 bankruptcy. If your disposable income is greater than $100 but less than $167, you may not qualify for Chapter 7 bankruptcy, but additional calculations are required. If your disposable income is greater than $167, you do not qualify for Chapter 7 bankruptcy.

For those whose disposable income falls between $101 and $167, existing debt is classified as secured, unsecured, priority, or dischargeable. If you have enough disposable income to pay at least 25 percent of your non-dischargeable, unsecured debt, you do not qualify for Chapter 7 bankruptcy. If you can pay less than 25 percent over the next five years, you qualify to file for Chapter 7 bankruptcy.

If you are considering bankruptcy, contact a qualified attorney in your state. An attorney specializing in personal bankruptcy can assist in choosing the best option for your situation.

 

NOLODRUPAL-web1:DRU1.6.12.2.20161011.41205