Means Test; All You Need To Know

  • Means Test; All You Need To Know

Means Test; All You Need To Know

Call: 888-297-6203

A means test is an essential eligibility test for bankruptcy filers under chapter 7. Chapter 7 is specifically intended for poor people with no, low, or inconsistent income. Since the discharge seems very appealing, many filers with considerable disposable income try to take advantage of chapter 7. As per many experts, the means test was intended to prevent fraud but it has only complicated filing process and has had very minimal impact on the bankruptcy frauds. A means test is an additional form that needs to be attached to the bankruptcy filing documents. Know more about bankruptcy and bankruptcy fraud at

How does the means test work?

A means test is a calculation of net household income with the state median. The basic rationale for this calculation and match is to match the filer’s disposable family income with the average family income in that region. The idea is to ensure people who can afford a decent living and can afford to pay off their debt should not be eligible for discharging most of their debt. The state median can be lower for a state that has a low cost of living and can be higher for a state that has a high cost of living. It is more likely to qualify means test in a state like California than in a state like Texas. Reach out to the best lawyers in and around Los Angeles & Dallas, TX by just dialing one number 888-297-6203.

The calculation of the means test is perceived differently and a lot of attorneys or bankruptcy filers might calculate income and expenses differently. The basic logic is to analyze all income sources in the last 6-8 months and figure out an average household income. The next step is to determine all essential and reasonable expenses that may include medicines, reasonable food, and grocery expenses, home mortgage interest, vehicle expenses, income tax, alimony, childcare payments, etc. The net amount hence obtained is the amount that should be matched with the state median.

What happens if you fail?

Failing means the test is not the end of the road, you can still file bankruptcy under chapter 13 or chapter 11. However, if you are just marginally failed in and around the state median, it isn’t a bad idea to consult an attorney as the experienced attorney can add some of the expenses or avail exemptions and might just qualify you for chapter 7. It might not be the case all the time, but you would be sure you had not qualified for chapter 7. To ensure this critical step that is a milestone towards chapter 13 or chapter 7 is maneuvered appropriately, dial 888-297-6203 and avail the best guidance now.