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- Titus 3:13

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What is the Means Test?

When filing for Chapters 7 bankruptcy, your finances will be examined in order to determine whether or not you qualify. This examination process is called the “means test,” and it is actually a formula that determines the amount of your monthly disposable income. The purpose of the test is to prevent individuals who receive enough income to get themselves out of debt without filing for bankruptcy from taking advantage of the benefits afforded to Chapter 7 bankruptcy qualifiers.

At Gagnon, Peacock & Vereeke, P.C., our attorneys possess full comprehension and understanding of bankruptcy law, and we can help you identify and pursue the best path forward to help you get out of debt and secure a fresh, financial start.

How does the Means Test Work?

Basically, the means test takes all of your recurring monthly expenses and subtracts them from your monthly paycheck. The remainder is your “disposable monthly income,” or what you should have available to pay for necessities such as groceries and gas for your car. If you are filing for bankruptcy over consumer debts, you will need to take the means test. The means test asks two questions in order to determine your eligibility for Chapter 7 bankruptcy:

  1. Do you make more or less than the average income for a household of your size in Texas? If the answer is less, you will likely qualify for Chapter 7 bankruptcy. If the answer is more, you must answer the second question.
  2. Do you have enough disposable income to pay off some of your unsecured debts? Once you subtract your monthly expenses from your paycheck, is the remainder enough for you to begin making small payments towards your unsecured debts? If yes, you might not qualify for Chapter 7 bankruptcy. If no, you have a good chance of being approved.

Determining your eligibility, as well as completing the application process, can be unfortunately complicated and difficult. As such, it is in your best interest to seek the advice and assistance of a qualified attorney to help you accurately complete all necessary forms and paperwork.

Contact a Bankruptcy Attorney in Plano

If you live in the Plano area and are considering filing for bankruptcy, contact Gagnon, Peacock & Vereeke, P.C., at (214) 317-4448 to speak to an experienced representative and learn more today.

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