Back in 2005, changes were made to the bankruptcy process to prevent abuse and fraud of Chapter 7 bankruptcy. One of those measures is called the means test. The means test is a series of criteria that narrows down those who qualify for Chapter 7 bankruptcy. If you pass the means test, then you do not have the “means” or any other way to pay off your debt.
Prior to the change, consumers were able to choose for themselves whether they filed under Chapter 7 or Chapter 13. Many of those consumers chose Chapter 7 because in Chapter 7, you do not have to reconcile your debt like you do in Chapter 13.
The means test is composed of two questions:
- Is your household income less than the median income of a household of your size in Florida? To find out, look up the median income for your state. If so, you qualify for Chapter 7 in your state. If not, answer the next question.
- Do you have enough disposable income to pay your creditors? If not, you qualify for Chapter 7. If so, you don’t and you will either have to file a Chapter 11 or Chapter 13.
Please keep in mind that every case is different, and the means test is very complicated. If you are thinking of filing bankruptcy and would like to schedule a no-cost consultation, please contact the bankruptcy attorneys at Leiderman Shelomith Alexander + Somodevilla, PLLC. by completing the form on this website or calling us at (954) 280-5066.