What is the Means Test?

Individuals who are unfamiliar with bankruptcy often ask what the "means test" is and how it relates to filing bankruptcy.  When filing Chapter 7 bankruptcy in Kansas City" all debtors are required to complete the means test.  The means test determines your eligibility to file for Chapter 7 bankruptcy.  Most individuals filing for bankruptcy are able to pass the means test.  A Kansas and Missouri bankruptcy attorney like myself, Cary Smalley of The Smalley Law Firm, can help you determine if you are able to "pass" the means test and be eligible to file for Chapter 7 bankruptcy.

The means test is essentially a method to compare your income to the median income of your state.  It looks at your actual income for the six months immediately prior to filing bankruptcy.  However, there are certain individuals that do not have to take the means test.  For example, military personnel are exempt from the means test.  If you are required to take the means test and your income falls below the median income for your state, based on the number of individuals in your household, then you will automatically be eligible to file Chapter 7 bankruptcy.

If your income is above the median income for your state you may still be eligible to file for Chapter 7 bankruptcy if the filing is not considering "abusive" under the Bankrupty Code.  In order to determine if the filing is "abusive" additional information must be provided about the debtor's monthly expenditures, along with IRS allowances for certain expenditures.  The filing is not considered "abusive" if the debtor does not have any "disposible income" after deducting expenses from income.

If the debtor still has disposible income after deducting expenses, you may still be eligible to file for Chapter 7 based on a formula.  Even if you are not eligible for Chapter 7 after the formula, you may still be eligible for Chapter 7 in Kansas City by demonstrating certain "special circumstances".

As you can see from above, there are number of ways to meet the means test, but it is complicated.  However, with an experienced Kansas City bankruptcy attorney most debtors are able to satisfy the means test.  For more information about bankruptcy please visit my website at http://www.thesmalleylawfirm.com or contact me at (913) 601-3549 for your free initial consultation.