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Chapter 7 Bankruptcy Means Test in Illinois

Published on November 4th, 2021

Chapter 7 Bankruptcy Means Test in Illinois (2021)

Bankruptcy Lawyer in Champaign, IL

Understanding your options is crucial when you find yourself in the midst of a financial crisis. With that being said, you could be comparing between Chapter 7 bankruptcy or Chapter 13 bankruptcy and wondering how to pass the means test in Illinois.

Taking your first steps in filing bankruptcy could be seeing if you may qualify for Chapter 7 bankruptcy, which is done by passing the means test. Generally, many individuals in Illinois prefer to file a Chapter 7 bankruptcy as it’s often less expensive than a Chapter 13 bankruptcy and takes far less time. You should be

able to take care of most of your debt and discharge from the Chapter 7 bankruptcy between 90 – 120 days.

You can either look towards the government’s means-testing website which can sometimes be overwhelming or schedule a free consultation with me so that we can go over it together.

What is Considered Income for the Means Test in Illinois?

You may be wondering if you are obligated to state all of your income for the means and how your income is calculated for the Illinois means test. 

With that all being said, the means test will use your most current income to see if you qualify for Chapter 7 bankruptcy. They will do a 6-month look-back at all your income sources, excluding social security and VA disability. 

There are a lot of cases where individuals may have different streams of income, as well as inconsistent income. You would calculate the average monthly income based on adding up your income sources and dividing by 6. For more information, take a look at the income calculation bankruptcy form

 

Illinois Median Income Breakdown

The means test qualification in Illinois is based on your household size, income, and location.

Please take a look at the table below to see if you may fall below the median income limit for filing Chapter 7 based on your income and household size (source). If you would like to get more information and have the means test calculated for you, you can take a bankruptcy calculator.

median income limit for filing for chapter 7 bankruptcy

Note: If your household size exceeds 8, add $9,000 for each individual in excess. 

You can qualify for Chapter 7 bankruptcy, but your assets may not be covered. This is essential to consider. To see if you would have full protection of your assets, please take a look at either the Federal or Illinois State Exemptions. Bankruptcy exemptions is the total amount of equity you can protect for each category when filing Chapter 7 bankruptcy. 

What If I am Above the Illinois Median Income Guideline?

You aren’t necessarily eliminated from a Chapter 7 bankruptcy if your income exceeds Illinois’ state median income for your household size. 

You would want to take a look at your expenses each month. These expenses may help your attorney make the case to qualify you for the Chapter 7 bankruptcy. Here are some expenses to consider: 

  1. Child support and alimony payments 
  2. Car and mortgage payments
  3. Dependents living at home or outside of the home
  4. Employment deductions, ie: union dues
  5. Income Taxes 
  6. Childcare expenses

However, if you have difficulty qualifying or have high-value assets, you can consider Chapter 13 bankruptcy. This process is where you restructure your existing debt into a repayment plan which lasts between 3 and 5 years. You can take a Chapter 13 bankruptcy payment calculator to estimate your Chapter 13 plan payment. 

What Are My Next Steps?

The median income guideline tends to update about every 6 months. If you are curious about your Chapter 7 bankruptcy qualification, you can give us a call at (309) 364-6807. You can also contact me directly as well if you have any questions or would like to schedule a free bankruptcy consultation. 

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