Florida Law Advisers, P.A.

Bankruptcy Means Test

In 2005, congress enacted the which made substantial changes to our national bankruptcy system. Included in the act is the requirement that Chapter 7 applicants pass the Means Test. The purpose of the Means Test is to reserve Chapter 7 bankruptcy protection for individuals who truly need it. The Means Test requires that applicants earn an income below a specified amount in order to be eligible for Chapter 7 bankruptcy. Determining eligibility for Chapter 7 can be complex and confusing without competent legal representation. If you are considering filing for bankruptcy, contact us to schedule a free consultation with an experienced Tampa bankruptcy attorney at our firm. During the initial consultation we will determine your eligibility and develop a comprehensive plan to help alleviate your financial troubles.

Step 1:

The first part of the Means Test is a straight-forward comparison of incomes. If your average income over the most recent 6 months is lower than the state median income for a household of the same size as yours, you automatically pass the Means Test. If your income is above the state’s median income you will need to continue with the Means Test to determine your eligibility for Chapter 7 bankruptcy.

Step 2:

The second step of the Means Test requires you to calculate your monthly disposable income. Monthly disposable income is determined by your gross monthly income minus allowable expenses. Next, you must project your disposable monthly income for the next five years by multiplying the monthly disposable income you calculated earlier by 60.

  • If your projected disposable income for the next five years is less than $7,025, you will pass the Means Test.
  • If your projected disposable income for the next five years is greater than $11,725, you will not satisfy the Means Test.
  • If the projected disposable income for the next five years is between $7,025 and $11,725 you will pass the Means Test and be eligible for Chapter 7 bankruptcy, so long as that disposable income is less than 25% of your outstanding unsecured debt.

In most cases, the higher the amount of disposable income, the less likely it is to pass the Means Test. However, even if you fail the Means Test, you may still qualify for Chapter 7 if you can show you have special circumstances that warrant you filing for Chapter 7.

If you are ineligible for Chapter 7, you may still have many other forms of debt relief available. For instance, you may want to explore filing for Chapter 13, Chapter 11, or negotiating with your creditors.

Consult a Bankruptcy Attorney in the Tampa Bay Area Today

If you need help determining eligibility for Chapter 7 bankruptcy, or assistance with any other bankruptcy matter, please call us to speak with a bankruptcy lawyer at our firm. Florida Law Advisers, P.A. is dedicated to providing effective representation, and affordable fees to all of our bankruptcy clients. The initial consultation is free, and we offer many flexible payment options for legal representation during your bankruptcy.

Florida Law Advisers, is a customer-service oriented firm with a strong reputation for providing personalized attention and dedicated legal counsel. Regardless if you need help with Chapter 13, Chapter 7, or other debt relief, our professional legal team will provide you with competent legal advice you can trust. Call us today to schedule a free confidential consultation with a Tampa Bankruptcy lawyer at our firm and start to regain your financial health.

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