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Bankruptcy and the Means Test

Posted on February 16, 2018 by Elizabeth Rosar Chermack

In my previous posts I discussed some of the distinctions between Chapter 7 and Chapter 13 bankruptcy. The means test is an important element to both Chapter 7 and Chapter 13 bankruptcy (unless you are exempt from the means test). If you do not pass the means test, you will not qualify for a Chapter 7 bankruptcy. The means test determines the length of time of your Chapter 13 plan in a Chapter 13 bankruptcy.

When new means test numbers are released, I tend to post about them on my blog. The means test numbers can be confusing. If your income is above the median income for your household size, it does not necessarily mean that you won’t qualify for a Chapter 7 bankruptcy. It also does not necessarily mean that you will be in a 5-year (instead of a 3-year) Chapter 13 plan.

If your income is above the median income for your household size, then in order to determine:

  • the length of your payment plan in a Chapter 13; or
  • whether you qualify for a Chapter 7 bankruptcy

you will need to submit the “long form” means test. The long form means test is based on IRS standards. Additionally, certain expenses in the means test are based on your actual expenses.

The means test can be very complicated. The forms themselves are not overly complicated, but the laws and standards behind the forms are. If you are submitting the long form means test, your attorney will likely require a large amount of documentation from you. Your attorney is not requiring that paperwork because they think it’s fun or because they are nosey; they are hoping to help you have the best possible chance at passing the means test.

Elizabeth Rosar Chermack is a Minnesota Bankruptcy Attorney, and can help you analyze whether Chapter 7 or Chapter 13 bankruptcy is the right choice for you.   Call (952) 491-0390 or send an email to liz@chermacklaw.com to schedule a consultation.

ATTORNEY ADVERTISING MATERIAL. The content of this website is for informational purposes only and is not intended as legal advice. No attorney/client relationship is formed by use of this website. Do not submit confidential information via this site unless and until there is a signed retainer contract on file.

Posted in Bankruptcy Law | Tags: Chapter 13 bankruptcy, Chapter 7 Bankruptcy, means test |
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© Elizabeth Rosar Chermack, Attorney at Law. Disclaimer: The content of this website is provided for informational purposes only. Information you obtain from this website is not, nor is it intended to be, legal advice. You should consult an attorney for individualized advice. Use of this website does not create an attorney-client relationship. Elizabeth Rosar Chermack, Attorney at Law, is a designated debt relief agency by an Act of Congress and the President of the United States. She assists consumers seeking relief under the U.S. Bankruptcy Code.