What is the bankruptcy Means Test?

The purpose of the “Means Test” is to help those that are unable to pay their debts seek protection of a Chapter 7 Bankruptcy. The Means Test determines whether or not you are eligible to file for a Chapter 7 Bankruptcy. The Means Test is an analysis of your income to determine whether or not you have the capability to pay to your creditors a portion of your income to repay back debt. If you have disposable income as calculated by the Means Test, you are not eligible for a Chapter 7 Bankruptcy but may be eligible for a Chapter 13 Bankruptcy.

How does the Means Test work?

1. If your debts are not primarily consumer debts, meaning that 49% or less of your debts are consumer related, then you do not need to take the means test and automatically qualify for a Chapter 7 Bankruptcy.
2. You first calculate your annual income based upon your six (6) month average prior to filing.
3. If your income is less than the median income established for the state of Utah based upon the size of your family, then you automatically qualify for a Chapter 7 Bankruptcy.
4. If your income is more than the median family income established for the state of Utah based upon the size of your family, then you must further explain and/or show all reasonable and necessary expenses to determine whether or not you have “Disposable Income” to repay back all or a portion of your debts. If at the end of the Means Test you have little to no “Disposable Income” then you may qualify for a Chapter 7 Bankruptcy.

Please contact us today, so we can help put a stop to creditor harassment and to help you get debt relief. If you have any questions about how you can get out of debt and regain control of your life, contact us by Phone at (801) 432-8682 or email us.

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Please call me today at (801) 432-8682 to discuss your specific situation and how Bankruptcy may be right for you.