Means Test
Bankruptcy Attorneys: Belleville, IL | Glen Carbon, IL | Highland, IL

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Means Test for Chapter 13 Bankruptcy

One of the qualifications for filing any type of bankruptcy is what is called the "Means Test". The Means Test is used to determine your ability to repay your debt. If you do not meet the means test for Chapter 7 Bankruptcy, then you will need to file Chapter 13 Bankruptcy. This is not a subjective measurement by a bankruptcy lawyer or bankruptcy court. The Means Test is provisioned by the United States Bankruptcy Code and cannot be modified in any way.

For a many people, their income for the size of their household prevents them from filing Chapter 7 Bankruptcy.  For those people their only option is Chapter 13 Bankruptcy.  However, even people who do qualify for Chapter 7 Bankruptcy choose to file for Chapter 13 Bankruptcy due to its advantages.  There are specific requirements to qualify for Chapter 13 Bankruptcy, including the Means Test.

If you do not qualify for Chapter 7 Bankruptcy, the Means Test for Chapter 13 Bankruptcy is used to determine the amount of surplus income you have to repay your debt.  This will play a factor in the length of your bankruptcy as well as the amount of your repayment.  However, the court must take into considerations additional factors, such as:

  • Reduction in income
  • Increases in allowed expenses
  • Loss of employment
  • One-time payments received prior to filing Chapter 13 Bankruptcy

if you income is less than the median income for your household size in State of Illinois. The threshold used to determine the median income varies by state and is updated regularly.

For example, if the median income for your area is determined to be $50,000 for your size household and your income is less than $50,000 you may be eligible for Chapter 7 Bankruptcy, provided you meet all other qualifications of Chapter 7 Bankruptcy. There are a number of variables that contribute to the formula used to determine your income and how your household size is determined can be more complex with matters of child custody, etc. It is important to speak with an experienced bankruptcy attorney about your specific situation. In some cases, even though you qualify for Chapter 7 Bankruptcy, it may not be the best choice for you. A bankruptcy lawyer can explain all your options.

We offer a FREE Consultation with a bankruptcy lawyer so you can make an informed decision about what type of bankruptcy is right for you.