Chapter 7 Bankruptcy Means Test
The Chapter 7 Bankruptcy Means Test is an Eligibility Test implemented after the 2005 Bankruptcy Amendments. Before the 2005 Amendments, the decision whether or not a person qualifies for Chapter 7 Bankruptcy was subjective. A person filing for Chapter 7 Bankruptcy now must qualify under the Means Test. The Means Test requires detailed information about a person’s income and debts. The Means Test is based on a person’s gross income earned over the six months prior to filing Chapter 7 Bankruptcy. Once the income is determined, that person’s expenses are input into the calculation. This test is very complicated and should be prepared by a Bankruptcy Attorney.
Once all the information has been input, either the “presumption arises” or “no presumption arises.” If the presumption arises is means that it is presumed that person does NOT qualify for Chapter 7 Bankruptcy and should be able to pay at least part of their unsecured debt such as credit cards, medical bills, pay day loans, signature loans, repossessions, foreclosures, etc. under a Chapter 13 Bankruptcy (Reorganization).