For debtors seeking bankruptcy protection taking the bankruptcy “means test” can be a hassle that doesn’t always leave the debtor with a fair shake.

For debtors seeking bankruptcy protection taking the bankruptcy “means test” can be a hassle that doesn’t always leave the debtor with a fair shake.  When the Bankruptcy Abuse Prevention And Consumer Protection Act (”BAPCPA”) was passed in 2005, it failed to truly do what it was designed to …

Tags: Bankruptcy Means Test

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… changes to the Bankruptcy Code that kicked into effect on October 17, 2005 was the new “means test” requirement.

Courts use the means test to determine whether someone qualifies for Chapter 7 bankruptcy, or if they must file for Chapter 13 instead.  Chapter 7 is the type of bankruptcy most people think of when they hear the word bankruptcy.  This form of bankruptcy allows most if not all unsecured debts to be completely discharged.

Of course, any type of bankruptcy …

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When debtors file for bankruptcy, they are required to take a means test which will determine if their income is 1) above or below the median income of that state and 2) if they have enough income to repay at least some of their debts. The test is based on the debtor’s income from the prior six months before they filed for bankruptcy. Unfortunately, if a debtor has recently lost their job, that means test may be inaccurate because they no longer have …

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… debtors who are married but filing alone don’t understand that they will be required to use a means test form to determine their eligibility for Chapter 7 bankruptcy; but that particular form might unlawfully disqualify them from Chapter 7 bankruptcy. The problem is that the form required for the Chapter 7 bankruptcy means test includes all of the non-debtor spouse’s income when comparing the monthly income to the median income without making any allowances for expenses that …

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In Dallas-Fort Worth Texas a debtor filing for Chapter 7 bankruptcy may have to take a means test which looks at the debtor’s average income over the 6 month period preceding the month of bankruptcy filing. In Texas, a single debtor filing for Chapter 7 bankruptcy must not make more than $3,093 per month or $18,560 over the past six months before filing for bankruptcy if he/she wants to avoid taking the means test. This figure is for a household of one person, those figures …

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If you’re a debtor filing for Chapter 13 bankruptcy you will be required to take a means test to determine if there is enough disposable income to fund a Chapter 13 bankruptcy. During Chapter 13 bankruptcy, a debtor will be required to fill out a B22 form which will generate a budget, with expense categories — housing, food, clothing, transportation etc. Each expense category is given a dollar figure by the IRS and they are not generous by any stretch of the imagination. …

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… will be determining whether or not you are qualified to file Chapter 7 bankruptcy through a means test.

Simply put, a means test is a standard measure of income and expenses, used to demonstrate a person’s anticipated ability or inability to repay their debt

Working with a qualified attorney, you and your spouse will need to complete Bankruptcy Form 22A  “Chapter 7 Statement of Current Monthly Income and Means-Test Calculation”.  The form looks similar to a standard tax …

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Debtors filing for Chapter 7 bankruptcy are required to take a “means test” which is designed to determine if the debtor has the ability to repay a substantial portion of his/her debts within a three to five year period.  However, there are some exceptions to the means test.

Social Security Income:  Income from social security is not taken into consideration during the bankruptcy means test.  For example, if a debtor filing for bankruptcy has $1000 …

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When massive changes to the bankruptcy law were implemented in 2005, the means test was designed to help clarify who qualifies for Chapter 7 bankruptcy, especially amongst high income debtors. Using "currently monthly income" was supposed to be the key to deciding if a debtor financially qualified for Chapter 7 bankruptcy ; but now the courts are split on what exactly constitutes monthly income. Generally speaking, monthly income is determined by adding …

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… the six month period prior to filing bankruptcy will be counted as income for the purposes of the means test.  If inclusion of that child support puts your income above the median income for the state of Texas, you may be forced to file Chapter 13 bankruptcy instead of Chapter 7 bankruptcy.  What this means is that instead of receiving a discharge of your debts in bankruptcy, you may need to repay them over a 3 to 5 year period.  Here’s what you should consider:

 Are you already …

Holding rental property when filing bankruptcy can impact your “means test” and your post-bankruptcy fresh start depending on the circumstances surrounding that property.  Let’s take a look at a few scenarios:

If you have a rental property with a paying tenant, the rent received will be counted towards your income.  This fact alone could cause you to “fail” the means test which would mean that you would need to file Chapter 13 …

… case.  In most cases, homes and vehicles are said to be exempt during a bankruptcy case.  This means that the debtor will get to keep the asset.

Means Test; this is a test to see who qualifies for Chapter 7 bankruptcy.  It takes into account income, unsecured debts owned, and disposable income available.  If you pass the means test, that means you qualify for Chapter 7 bankruptcy.

Schedules; these are documents that state an individual’s assets, income, and debt.  A bankruptcy …