What is the Bankruptcy Means Test?

Understanding the Chapter 7 Means Test for Bankruptcy

When you are struggling through hard times financially, you may feel as if you have no options. For anyone who needs help to end creditor harassment, bankruptcy is an enticing alternative. Consumer debtors generally have two bankruptcy choices – Chapter 7 bankruptcy and Chapter 13 bankruptcy. Which one you file depends on a variety of factors, but the starting point is the bankruptcy means test. Bankruptcy lawyer Kevin D. Judd can evaluate your finances and help you figure out where the means test places you.

The bankruptcy means test is a form you must file with the bankruptcy court. The form is a calculation of your average gross income over the six-month period prior to your bankruptcy filing. For example, if you file your case in October, your calculation time period is April 1 through September 30. If your average gross income is below the median for your household size in your residential area, you have passed the means test; you do not have to complete the entire form. You can file Chapter 7 bankruptcy or, if you need to file a Chapter 13 case, you can limit your case to three years.