Means Testing - What is it?
A means test, provided by federal bankruptcy law, determines whether or not you are eligible for Chapter 7 bankruptcy. The test is used to limit Chapter 7 bankruptcy to those people who truly can't repay their debts. In order to qualify, your income must be below the median income for families in your state. As a consumer, if you do not qualify for a Chapter 7 bankruptcy your only option will be to file a Chapter 13 bankruptcy. Click here to see a chart of the state median incomes.
The means test is a two-part test. The first part of the test is a formula that exempts all survival expenses (food and rent) in order to determine whether the debtor can afford to pay 25% of his non-priority unsecured debts (e.g., credit cards). If the debtor can afford to pay this debt he or she will not be eligible for a Chapter 7 bankruptcy. Under the second part of the test the debtor's income is compared to his state's median income. Usually if the debtor's income or his family's combined gross income is greater than the state's median income he or she will not be eligible for a Chapter 7 bankruptcy. To read more about this topic see Means Test.
A Florida Bankruptcy Attorney should be contacted to discuss whether you will qualify for a Chapter 7 or Chapter 13 bankruptcy.
Greg Gilbert
Keith Maynard
