Experienced Guidance Navigating Bankruptcy And Divorce

Experienced Guidance Navigating Bankruptcy And Divorce

The Means Test For Chapter 7 Bankruptcy

On Behalf of | Feb 18, 2022 | Bankruptcy

A lot of Indiana consumers who are struggling with their financial obligations are not certain if bankruptcy is the right option for them. Qualifying for Chapter 7 bankruptcy requires that you have a certain income and owe significant personal debts. There is a test that people must take to decide if they’re eligible for Chapter 7 bankruptcy.

The means test

In this state, an applicant must take the means test to determine your eligibility for Chapter 7 bankruptcy. Your household income, your expenses and the size of your household are evaluated to determine if you can repay your debts.

The requirements

To be eligible to take the test, you need to have consumer debts, also known as personal debts, which exclude business debts. First, the test reviews your household income to determine if your income falls below the median household income in your state. However, it’s important to consider if your income will increase or decrease by the time you start your bankruptcy plan. Since there are few requirements, most applicants have passed the means test.

Eligibility: The first part of bankruptcy

The means test is designed to reduce the number of debtors who use Chapter 7 bankruptcy. However, passing the test only requires that you have a qualifying income, assets and liabilities. It i s used to determine that you can pay off your bankruptcy without having to delay or cancel the plan. If you don’t qualify for Chapter 7, you have the option to file for Chapter 13 bankruptcy. In either case, you have to be screened to see if you’re eligible for the repayment plan.