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The Means Test: Qualifying For Chapter 7

By Joseph P Doyle  Jan. 18, 2013 11:44a


If you are considering filing for debt relief, it is important that you speak with a qualified professional with experience handling bankruptcy cases right away. The specifics of the legal situation in your area can vary wildly, and you will want the help of a trained attorney before making any decisions that could change your future forever.

One of the most important choices you must make when deciding to erase your debt is whether to pursue Chapter 7 debt liquidation or Chapter 13 debt consolidation. Sometimes, however, this decision may be made for you. Before you can file under Chapter 7, you are required to first undergo what is referred to as the "Means Test."

Passing The Test

In order to understand the Means Test, it is important to understand the difference between Chapter 7 and Chapter 13. When filing under 13, you are seeking to construct a repayment plan, occurring over a term of three to five years, based on your monthly income, that will allow you to repay a portion of your debt without adversely affecting your finances. Under Chapter 7, however, your non-exempt assets and possessions are seized and sold off to generate a sum of money, which is then used to repay your creditors.

Chapter 7 is intended for those clients without a regular income or significant property who wish to end their debt as quickly as possible. The purpose of the Means Test therefore is to ensure that clients who would otherwise be able to pay off a greater portion of their debt through Chapter 13. By requiring debtors to pass this exam, the court system hopes to prevent clients from abusing the bankruptcy system.

The Means Test involves two calculations, which will be performed by a court-appointed trustee given access to your financial records. The auditor will first attempt to determine your average monthly income. This figure is then compared to the mean income of a household in your area. If you are below the mean, congratulation: you automatically pass the Means Test and are free to pursue Chapter 7 debt relief. If your average monthly income is not below the mean, however, you will move on to the second portion of the test, a complex calculation designed to determine your disposable income.

A Bankruptcy Lawyer Can Help You Today

If you are burdened by the weight of your debt, it may be time to seek fresh start! With the aid of the experienced team at the firm of Joseph P Doyle, you can end your debt and breathe easily once again. Please, visit our website at or contact our office to discuss your finances with us. Your first consultation is absolutely free!

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