The Means Test

Any potential debtor filing for Chapter 7 must prepare a means test in order to determine whether or not a complete discharge or a repayment plan would be a better option.  This test is applied to prevent misuse of Chapter 7 filings for individuals who are capable of carrying out a successful Chapter 13.  If your available income greatly exceeds your expenses you will likely not meet the threshold of the means test and may not be eligible for Chapter 7.

The means test does not require that you are completely destitute.  Some individuals earn higher incomes and still file Chapter 7 because their necessary expenses do not leave them with enough money to cover other bills.  This test subtracts your expenses from your currently monthly income to determine how much income is left over to pay bills.  The more money left over, the more likely you can complete a successful Chapter 13.  If your income is below the median income for your state, it is highly likely that you will be allowed to file a Chapter 7.

Again, it is not necessary that you are completely impoverished to pass the means test.  With years of bankruptcy experience, a Fears | Nachawati attorney can help you navigate through the process and determine what type of filing is for you.