Avvo
Yelp
Super Lawyers
NACBA
BBB - Accredited Business

Chapter 7 Means Test

What is the Means Test?

The “means test” is used to determine eligibility towards filing for bankruptcy. The means test was established around 2005 to determine whether an individual debtor has the capability to repay any portion of their debt due to disposable income they have after paying their necessary living expenses.

How Does the Mean Test Work?

This test helps filter out those who are able to repay their debts from those who are not by checking for potential disposable income. A Chapter 7 is meant for only those who are unable to pay any of their debt. If your income is less than the median, which varies by state, you are automatically qualified for filing. The higher the amount of disposable income (income left over after paying monthly expenses) you have, the more unlikely it will be for you to qualify for a Chapter 7. However, there are always exceptions to the rule, so never rule yourself out until your case has been competently calculated and analyzed by an experienced bankruptcy attorney.

The means test takes into consideration a Debtor(s) average gross income for the last 6 months while deducting necessary living expenses, based on IRS standards. Living expenses are nationally set based on IRS standards and tweaked based on what city one lives in. The major issue many come across in dealing with the means test is that the IRS standards for certain living expenses are much lower than what an individual may actually spend. For example, you may pay $3500/month for rent of your residence, but the Means Test may only give you credit for $2100 of that full amount, stating that only $2100 is reasonable for your family size in your locality. Therefore, this may leave you exposed to showing disposable income, which in reality you may not have. Our firm will analyze your means test and budget to see potential red flags that must be addressed prior to you filing your case so there are no issues or potential dismissals or conversions after filing.

Does a High Income Automatically Make Me Ineligible for a Chapter 7?

No. Having a high income does not necessarily disqualify a person from a Chapter 7. If you have a lot of expenses, such as car loan payments and a mortgage, you can still qualify for a Chapter 7. Your monthly expense standards vary based upon where you live. Please contact us for a free consultation at Bereliani Law Firm to learn more about where you stand on eligibility.

Client Reviews
★★★★★
Sanaz is an amazing attorney. She was professional, thorough as well as timely in answering all questions. She was cautious with all details and helped me through the entire process definitely recommend her. Aaron M
★★★★★
I had a consultation with Ms. Bereliani. She gave me great information and referred me to resources I didn't know was available to me. I felt she was honest, knowledgeable, and non-judgemental. Mabel R
★★★★★
To be frank, I couldn't have asked for a better attorney for something as hard to do as file for bankruptcy. Though I am on top of my details, she is so thorough, that if I had been neglectful, she and Chris would have helped keep me on track. Mark G
★★★★★
I can say I wish I never had to hire a lawyer for bankruptcy services, but I couldn't have picked a better lawyer for the job! Sanaz was so caring and kind and walked me through the entire process step by step. Cassie C
★★★★★
Sanaz, I want to thank you and your team for doing such an amazing job. You are not only a highly qualified attorney with an outstanding skill set in bankruptcy law, but you are also an attorney with heart and compassion. You took a moment in my life that felt devastating and brought the human element to me. I knew from the onset after our first call that you were the person for the job. Your guidance, patience, and command of your craft brought me and my family comfort. I would not have made it across the finish line if it weren't for you and your team and the love of my family. Feel free to use this testimonial as you see fit. JG