{"id":2175,"date":"2021-07-26T01:45:44","date_gmt":"2021-07-26T05:45:44","guid":{"rendered":"https:\/\/thegraftonfirm.com\/?p=2175"},"modified":"2023-05-16T12:52:47","modified_gmt":"2023-05-16T16:52:47","slug":"how-to-qualify-for-chapter-7-means-test","status":"publish","type":"post","link":"https:\/\/thegraftonfirm.com\/bankruptcy\/how-to-qualify-for-chapter-7-means-test","title":{"rendered":"How to Qualify for Chapter 7 Means Test"},"content":{"rendered":"<p>&nbsp;<\/p>\n<p><img fetchpriority=\"high\" decoding=\"async\" class=\"aligncenter wp-image-1521 size-full\" title=\"Towson bankruptcy attorney\" src=\"https:\/\/thegraftonfirm.com\/wp-content\/uploads\/2020\/07\/Steps-In-Filing-Chapter-7-Bankruptcy.jpg\" alt=\"Towson bankruptcy attorney\" width=\"626\" height=\"417\" \/><\/p>\n<p><b>Bankruptcy<\/b><span style=\"font-weight: 400;\"> is considered one of the most common debt relief options. It can help you pay off your overwhelming debt to your creditor so you can have a fresh start. It is a legal process that allows you to clear your financial problems, reorganize your finances, and pursue debt settlement. Bankruptcy laws may vary from state to state. In Maryland, there are bankruptcy rules that you need to follow when you file for bankruptcy.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Before <a class=\"linkilo_keyword_link  hyperlinks\" href=\"\/ch7\/declaring-bankruptcy-under-chapter-7-and-the-means-test\"  rel=\"dofollow\" title=\"declaring bankruptcy\" data-linkilo-keyword-link=\"linked\">declaring bankruptcy<\/a>, you must know how to choose the best bankruptcy type. Choose one that will help you pay all the money you owe to your creditor and solve your debt problems. Chapter 7 bankruptcy is one of the most common <\/span><b><a class=\"linkilo_keyword_link  hyperlinks\" href=\"\/bankruptcy\/the-most-common-types-of-bankruptcies-explained\"  rel=\"dofollow\" title=\"types of bankruptcy\" data-linkilo-keyword-link=\"linked\">types of bankruptcy<\/a><\/b><span style=\"font-weight: 400;\">. A <\/span><a href=\"https:\/\/thegraftonfirm.com\/\"><span style=\"font-weight: 400;\">credible Towson bankruptcy attorney<\/span><\/a><span style=\"font-weight: 400;\"> can help you figure out if you\u2019re eligible for the chapter that you wish to file. There are certain requirements that you need to meet before you qualify for Chapter 7 bankruptcy. One of the most important qualifications is to pass the means test. This article will explain how Chapter 7 means test works by answering the following questions:<\/span><\/p>\n<ol>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">What is a Means Test?<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">How Does Chapter 7 Means Test Work?<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">How to Calculate Your Means Test Income?<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">How to Fill-Out a Means Test Form?<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">What Happens If You Pass the Chapter 7 Means Test?<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">What If Your Disposable Income Is Higher Than the Median Income?<\/span><\/li>\n<\/ol>\n<p><span style=\"font-weight: 400;\">\u00a0<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"What_is_a_Means_Test\"><\/span><span style=\"font-weight: 400;\">What is a Means Test?<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2><div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<label for=\"ez-toc-cssicon-toggle-item-6636e9565a220\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6636e9565a220\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/thegraftonfirm.com\/bankruptcy\/how-to-qualify-for-chapter-7-means-test\/#What_is_a_Means_Test\" title=\"What is a Means Test?\">What is a Means Test?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/thegraftonfirm.com\/bankruptcy\/how-to-qualify-for-chapter-7-means-test\/#How_to_Calculate_Your_Means_Test_Income\" title=\"How to Calculate Your Means Test Income\">How to Calculate Your Means Test Income<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/thegraftonfirm.com\/bankruptcy\/how-to-qualify-for-chapter-7-means-test\/#How_to_Fill-Out_a_Means_Test_Form\" title=\"How to Fill-Out a Means Test Form\">How to Fill-Out a Means Test Form<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/thegraftonfirm.com\/bankruptcy\/how-to-qualify-for-chapter-7-means-test\/#What_Happens_If_You_Pass_the_Chapter_7_Means_Test\" title=\"What Happens If You Pass the Chapter 7 Means Test?\">What Happens If You Pass the Chapter 7 Means Test?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/thegraftonfirm.com\/bankruptcy\/how-to-qualify-for-chapter-7-means-test\/#What_If_Your_Disposable_Income_Is_Higher_Than_the_Median_Income\" title=\"What If Your Disposable Income Is Higher Than the Median Income?\">What If Your Disposable Income Is Higher Than the Median Income?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/thegraftonfirm.com\/bankruptcy\/how-to-qualify-for-chapter-7-means-test\/#The_Role_of_a_Bankruptcy_Attorney\" title=\"The Role of a Bankruptcy Attorney\">The Role of a Bankruptcy Attorney<\/a><\/li><\/ul><\/nav><\/div>\n\n<p><span style=\"font-weight: 400;\">The \u201c<\/span><b>means test<\/b><span style=\"font-weight: 400;\">\u201d is designed to keep high-income filers from filing bankruptcy Chapter 7. The main goal of the means test is to require those high-earning debtors to pay back some or all of their debt by filing Chapter 13, rather than granting them a <a class=\"linkilo_keyword_link  hyperlinks\" href=\"\/bankruptcy\/what-debts-are-not-included-in-the-bankruptcy-discharge\"  rel=\"dofollow\" title=\"bankruptcy discharge\" data-linkilo-keyword-link=\"linked\">bankruptcy discharge<\/a> under Chapter 7. It\u2019s called the <a href=\"https:\/\/thegraftonfirm.com\/bankruptcy\/what-is-the-chapter-7-bankruptcy-means-test\">bankruptcy means test<\/a> because it is a test that verifies if someone has the \u201cmeans\u201d to pay their debts.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">How Does Chapter 7 Means Test Work?<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The means test helps determine the amount of your disposable income by deducting certain monthly expenses from your current monthly income (average income for the past six months before filing for bankruptcy). If your disposable income turns out to be higher than the <\/span><b>median income<\/b><span style=\"font-weight: 400;\"> of your state, then you won\u2019t qualify to file for Chapter 7 bankruptcy. In this case, you\u2019ll have to use Chapter 13 if you want to file for bankruptcy.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This test is only for filers who have primarily consumer debts such as <a href=\"https:\/\/thegraftonfirm.com\/bankruptcy\/how-to-repair-credit-after-bankruptcy\">credit card debt or medical debt<\/a>. You\u2019re not required to pass the means test if your debt is mainly from a business that you own. If you\u2019ll file Chapter 13 bankruptcy, this test also plays an important part in setting the payment plan.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">\u00a0<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"How_to_Calculate_Your_Means_Test_Income\"><\/span><span style=\"font-weight: 400;\">How to Calculate Your Means Test Income<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">The first part of the means test compares your current <\/span><b>monthly income<\/b><span style=\"font-weight: 400;\"> to the median income. The median income levels differ by state and size of the household. Each jurisdiction has different allowed amounts for categories of living expenses, such as transportation, housing, and other necessities.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The means test income computation includes your income from the following sources:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">all wages, salary, tips, bonuses, and commissions<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">workers\u2019 compensation<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">state disability insurance<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">unemployment compensation<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">rental and real property income<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">regular child support or spousal support<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">pension and retirement income<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">interest, dividends, and royalties<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">gross income from a business<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">annuity payments<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">If your disposable income is below the median income of the state, then you pass the means test and you can now file for <\/span><a href=\"https:\/\/thegraftonfirm.com\/debt-resolution-services\/chapter-7\"><span style=\"font-weight: 400;\">Chapter 7 bankruptcy<\/span><\/a><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">\u00a0<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"How_to_Fill-Out_a_Means_Test_Form\"><\/span><span style=\"font-weight: 400;\">How to Fill-Out a Means Test Form<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">If you want to check your eligibility to file a Chapter 7 means test, you can fill out the official means test forms which can be downloaded from the website of the United States Bankruptcy Court. An experienced Towson bankruptcy attorney can help you in filing your bankruptcy paperwork. Here are the required forms:<\/span><\/p>\n<p><span style=\"font-weight: 400;\"><strong>Form 122A-1<\/strong> \u2013 This is the first form (also known as the form for the Chapter 7 Statement of Your Current Monthly Income). If your income falls below the median income of your state, then you can be eligible for a Chapter 7 bankruptcy.<\/span><\/p>\n<p><span style=\"font-weight: 400;\"><strong>Form 122A-2<\/strong> \u2013 This form is for the Chapter 7 Means Test Calculation. If your income is higher than the median income of the state, you may still qualify. On this means test form, you&#8217;ll subtract the allowable expenses to check whether you have enough disposable income to make monthly payments into a Chapter 13 bankruptcy <\/span><b><a href=\"https:\/\/thegraftonfirm.com\/ch13\/how-to-file-a-chapter-13-repayment-plan-in-maryland\">repayment plan<\/a>.<\/b><\/p>\n<p><span style=\"font-weight: 400;\"><strong>Form 122A-1Supp.<\/strong> \u2013 Filers like military members are not required to take and pass the means test. To determine whether you\u2019re exempted to take the means test, you need to fill out the Statement of Exemption from Presumption of Abuse Under \u00a7 707(b)(2).<\/span><\/p>\n<p><span style=\"font-weight: 400;\">\u00a0<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"What_Happens_If_You_Pass_the_Chapter_7_Means_Test\"><\/span><span style=\"font-weight: 400;\">What Happens If You Pass the Chapter 7 Means Test?<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Passing the means test gives you a go signal to file for bankruptcy Chapter 7. This bankruptcy type will forgive most of your unsecured debts. However, qualifying for Chapter 7 bankruptcy doesn\u2019t automatically mean that it is the best bankruptcy chapter for your case.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">When you pass the means test, the court will take a look at the two additional bankruptcy forms from your application \u2013 Schedule I: Your Income and Schedule J: Your Expenses. If you still have sufficient disposable income left to repay your debts, the court might modify your Chapter 7 bankruptcy case to Chapter 13.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">\u00a0<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"What_If_Your_Disposable_Income_Is_Higher_Than_the_Median_Income\"><\/span><span style=\"font-weight: 400;\">What If Your Disposable Income Is Higher Than the Median Income?<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">If it turns out that your <\/span><b>disposable income<\/b><span style=\"font-weight: 400;\"> is higher than the state\u2019s median income, you may still be able to qualify for Chapter 7 bankruptcy under certain circumstances. You may undergo a second <a href=\"https:\/\/thegraftonfirm.com\/ch7\/declaring-bankruptcy-under-chapter-7-and-the-means-test\">computation of the means test<\/a>; however, the calculation becomes more complex than the first.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The second part of the test requires you to gather documentation of expenses for the past six months. Costs of rent, clothing, groceries, and medical bills are called \u201callowable expenses\u201d. You must use IRS standard expense figures in identifying the allowable expenses. The means test uses the national and local standards in your state for certain living expenses such as rent, utilities, food, gas, and clothing when determining your disposable income. Even if your actual expenses for these items are higher than the allowed standards, you can&#8217;t take advantage of them to minimize your disposable income.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">You must ensure the accuracy and completeness of the list of your expenses. You can\u2019t make crucial mistakes such as listing conflicting amounts for the same expense or omitting valuable items. Any error can result in the dismissal of your bankruptcy case. If your disposable income adds up to more than a certain amount after the second computation, you fail the means test and cannot get a discharge by filing for Chapter 7 bankruptcy.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">\u00a0<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"The_Role_of_a_Bankruptcy_Attorney\"><\/span><span style=\"font-weight: 400;\">The Role of a Bankruptcy Attorney<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Taking the means test is one of the most important steps in the<\/span><b> bankruptcy process<\/b><span style=\"font-weight: 400;\">. It is important for you to know and understand how the means test works and how to qualify for it. There are several factors that you need to consider to pass the means test. For legal help in your bankruptcy case, do not hesitate to schedule a consultation with our competent Towson bankruptcy attorneys at The Grafton Firm. Contact our <\/span><a href=\"https:\/\/thegraftonfirm.com\/contact-us\"><span style=\"font-weight: 400;\">bankruptcy law firm<\/span><\/a><span style=\"font-weight: 400;\"> to help you decide which chapter is the best debt relief option for you. From there, we can work together to help you pass the means test and wipe out your debts through a successful bankruptcy filing.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&nbsp; Bankruptcy is considered one of the most common debt relief options. It can help you pay off your overwhelming debt to your creditor so you can have a fresh start. It is a legal process that allows you to clear your financial problems, reorganize your finances, and pursue debt settlement. Bankruptcy laws may vary [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":2577,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[57,60],"tags":[],"_links":{"self":[{"href":"https:\/\/thegraftonfirm.com\/wp-json\/wp\/v2\/posts\/2175"}],"collection":[{"href":"https:\/\/thegraftonfirm.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/thegraftonfirm.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/thegraftonfirm.com\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/thegraftonfirm.com\/wp-json\/wp\/v2\/comments?post=2175"}],"version-history":[{"count":5,"href":"https:\/\/thegraftonfirm.com\/wp-json\/wp\/v2\/posts\/2175\/revisions"}],"predecessor-version":[{"id":3604,"href":"https:\/\/thegraftonfirm.com\/wp-json\/wp\/v2\/posts\/2175\/revisions\/3604"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/thegraftonfirm.com\/wp-json\/wp\/v2\/media\/2577"}],"wp:attachment":[{"href":"https:\/\/thegraftonfirm.com\/wp-json\/wp\/v2\/media?parent=2175"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/thegraftonfirm.com\/wp-json\/wp\/v2\/categories?post=2175"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/thegraftonfirm.com\/wp-json\/wp\/v2\/tags?post=2175"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}