What exactly happens with the Chapter 7 means test?
A. If you are interested in filing Chapter 7 bankruptcy, you will have to determine if you qualify for this form of bankruptcy protection via the Chapter 7 means test. Essentially, the first part of the Chapter 7 means test compares your income to the median income in your state for the family that is the same size as yours. If your income is less than the median income in your state, you pass the test and qualify for Chapter 7 bankruptcy. If your income proves to be greater than the median income in your state, this doesn’t mean that you don’t qualify for this form of bankruptcy; it simply means that you must move on to the next step, which involves calculating your disposable income and debts. With all this information considered, most people have found that they still qualify for Chapter 7 bankruptcy after the inception of the 2005 bankruptcy law. In the rare cases when people don’t qualify, Chapter 13 bankruptcy may be an option.
