Understanding the means test for Chapter 7 bankruptcy

On Behalf of | Jul 8, 2022 | Chapter 7 |

Filing for Chapter 7 bankruptcy in Florida doesn’t need to be a complex process. You should already have a good idea of what you expect the results to be. Once you have a clear goal in mind, the actual process is fairly simple. There are a few tests you will need to pass in advance. One of them will be the means test.

A means test will determine your eligibility

The process of filing for Chapter 7 is preceded by a means test. The purpose of this test will be to determine if you are eligible to receive this type of bankruptcy protection.
The bankruptcy means test is designed to take into account your income as a whole. This is balanced against your various expenses as well as the size of your family. The point has traditionally been to limit the number of people who are eligible. However, in most cases, you can show enough good evidence to pass.

The two parts of the test

There are many pros and cons that can be associated with filing for Chapter 7 bankruptcy. One of the pros is that the test itself is fairly simple. The first part checks whether your household income is above or below the median income of your state. If below, you pass.

The second part of the test is where you add up all of your allowable expenses. These include the cost of rent, clothing, food, and medical care. What’s left is the amount you can pay your debts with. If what’s left is low enough, you qualify for Chapter 7.