Jump to Navigation

Understanding the Chapter 7 bankruptcy means test

When seeking Chapter 7 bankruptcy protection, people in Washington, D.C., and elsewhere must meet certain eligibility requirements. One of these qualifications is the means test. In order to ensure they are choosing the right debt relief option for their situations, it behooves people to understand what the means test is and when it is applicable.

People must provide information about their monthly income and expenses when filing for Chapter 7 bankruptcy. According to the U.S. Department of Justice, they will be required to input this information onto the appropriate version of Bankruptcy Form 122. In addition to detailing their gross monthly income, people must also provide specifics relating to their allowed monthly expenditures. They may be required to include details regarding the following: wages, interest, commissions, dividends, royalties, rental and real property income, pension, retirement income, workers’ compensation benefits and state disability insurance.

In situations when people’s average monthly incomes exceed the state median for a family of their size, they may be subject to the means test. The U.S. Trustee Program reports that the median annual income for a one earner household in the District of Columbia is $50,133. For a family of between two and four people, the median income is $91,303.

The means test was developed to ensure that only those who truly cannot pay their debts are eligible for Chapter 7 bankruptcy protection. To this end, calculations are utilized to determine whether people would have enough left over to repay some of their debts after deducting certain expenses. The calculations utilize the information people provide on their bankruptcy forms. The Department of Justice points out that other information required for the means test forms may be obtained from the Internal Revenue Service and the Census Bureau.

Determining eligibility for Chapter 7 bankruptcy protection may be challenging in some cases. Therefore, it may be helpful for people who are seeking debt relief to consult with an attorney to discuss their options.

No Comments

Leave a comment
Comment Information
Start Right Now

Bold labels are required.

Contact Information

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

Visit Our Bankruptcy Law Website Subscribe to This Blog's Feed
Office Locations

1115 Massachusetts Ave NW,
Washington, DC 20005
Phone: 202-559-1428

10512 Pohick Court,
Fairfax Station, VA 22039
Phone: 703-550-7030

6926 Seven Locks Road,
Cabin John, MD 20818
Phone: 301-890-4500

Toll-Free: 877-441-4076
Fax: 202-638-5858

Twitter link