Do I Qualify for Bankruptcy?

You qualify for a bankruptcy unless:

1)      You got a chapter 7 discharge in case filed within the last 8 years, or

2)      You got a chapter 13 discharge in a case filed within the last 6 years.

What About The Means Test?

There is a lot of confusion about what the Means Test does and does not do.  There are three important things to remember about the Means Test:

1)      The Means Test does not prevent you from filing bankruptcy.

2)      The Means Test is tricky.  Talk to an experienced bankruptcy attorney.

3)      Most people qualify for chapter 7.

The Means Test is used to determine two things: 1) whether you qualify for a chapter 7, and 2) the kind of chapter 13 plan you qualify for.

The Means Test uses average income minus allowed expenses to determine whether you can file a chapter 7.  If you do not qualify for a chapter 7, then you have to file a chapter 13.

You may have tried one of those online Means Test Calculators; but you should talk to a lawyer to get an accurate result.  The Means Test has a lot of special rules and exceptions to it:

  • Certain forms of income do not have to be counted on the Means Test.
  • If one spouse doesn’t file bankruptcy or if you are separated, the Means Test is calculated differently.
  • Make sure that your lawyer understands when and how to apply the marital adjustment.
  • You may not have to run the Means Test if you have primarily non-consumer debt, i.e. more business debt than personal debt.
  • Some of your monthly expenses are set using an IRS allowance table and others are based on actual expenses.  If an IRS allowance is too low, you may be able to have it increased in special circumstances.