The Chapter 7 Means Test Explained
Is Chapter 7 Bankruptcy For You?
Chapter 7 is by far the most popular form of bankruptcy for consumers. However, not everyone is qualified to have this type of case. Consumers must take a “means” test before finding out if you qualify.
This test looks at your income and expenses, and compares it to the federal regulations in the bankruptcy code. It is designed to keep those with higher incomes from filing Chapter 7. Those consumers would have to file Chapter 13 instead and repay a portion of their debts.
Chapter 7 Means Test
The means test calculates your current monthly income based on the past six calendar months. Then it deducts your monthly expenses to determine your monthly disposable income. If your monthly income is less than a median income for a household in Kansas or Missouri, then you pass the test.
For example, in a case filed after May 1, 2014 in Kansas, the average household income for a one-income household is $44,434. For two people, it is $58,344. For a family of three people, it is $66,352 and for four people, it is $73,514.
In Missouri, the average household income for a one-income household is somewhat lower at $41,594. For two people, it is $52,174. For a family of three people, it is $58,310 and for four people, it is $73,288.
Using those figures, we can determine that if a single filer’s income is less than $44,434 in Kansas and $41,594 in Missouri, you would qualify for a Chapter 7 bankruptcy.
Free Means Test Calculator
You can use the free means test calculator at LegalConsumer.com. But don’t be discouraged if the results aren’t what you expect. Instead, give us a call. Our attorneys will be able to go through your financial records with you to determine which chapter is right for you.
Call us today at 816-842-6200 to speak with an attorney. Or you can email us and schedule your free consultation.