The Means Test for Chapter 7

If you are considering filing for Chapter 7 bankruptcy, you’ll need to pass a “means test,” which determines eligibility based on your income and unsecured debt. And if you feel overwhelmed, remember that you’re not alone. Speak with an experienced bankruptcy attorney today for a free consultation.The means test has two parts, and you only need to pass one to be eligible for Chapter 7 bankruptcy:     – Median income – Your average income in the past six months will be compared to the median income in the state of Illinois. You will be eligible for Chapter 7 if your income is below the median income; if not, you may qualify based on test two.     – Disposable income – Your disposable income will be calculated, which is how much you have to spend each month after subtracting necessary expenses. If your disposable income will be $6,000 or less for the next five years ($100 per month), you will be eligible for Chapter 7. If it will exceed $10,000 for the next five years, you may not “need” chapter 7 in the eyes of the law and will instead be encouraged to file for Chapter 13.     – Possible third test – If your disposable income over the next five years will be between $6,000 and $10,000, you may take part in an additional test which you will pass “if your predicted disposable income is less than 25% of your unsecured non-priority debts.”