Guide to the Bankruptcy Means Test
The Bankruptcy Means Test that Pioletti Pioletti & Nichols uses is an important component of bankruptcy. It determines whether you are eligible to file a Chapter 7 bankruptcy as well as whether you must be in a 3 or 5 year plan if you file a Chapter 13 bankruptcy.
Its formula is designed to keep filers with higher incomes from using Chapter 7 to wipe away their debts and instead put those filers into Chapter 13 where they will have to pay back at least a portion of those debts.
How Does The Means Test Work?
The first step of the Bankruptcy Means Test is to determine your average monthly income for the last 6 months, and then compare that figure to the median income for a family of the same size in Illinois. If your income is above the median income you may have trouble filing a Chapter. For purposes of a Chapter 13, if your income is below the median income your plan will likely last 3 years, and if it is above the median income you plan will likely last for 5 years.
Currently in Illinois the Median Incomes as of April 1, 2014 are as follows:
| Household Size | Monthly Median Income | Annualized Median Income |
|---|---|---|
| 1 | $4,019 | $48,232 |
| 2 | $5,179 | $62,150 |
| 3 | $5,920 | $71,040 |
| 4 | $6,906 | $82,876 |
| 5 | $7,581 | $90,976 |
If your income is less than the median for a household of the same size above, you pass the means test! You do not need to go on any further and you qualify for Chapter 7.
If your income is more than the median for a household of the same size above, you may still qualify for Chapter 7 but a more detailed analysis will need to be done. The amount and types of your debts will have to be computed and compared with your income and household expenses. This can be done either over the phone or with a sit down consultation at Pioletti Pioletti & Nichols, free of charge.
Deciding to File for Bankruptcy
When you need to file for bankruptcy and get out of debt, you need the help of a Bankruptcy Means Test attorney you can depend on to steer you in the right direction. When you do file for bankruptcy, you want to ensure that you are getting help from an attorney who can tell you which paperwork you need to file, what the deadlines are, and who can help you navigate the different options.
That’s where the attorneys at Pioletti Pioletti & Nichols comes in. We are dedicated to helping our clients with their bankruptcy problems and questions and can give you not only sound legal advice but can help you with your paperwork from the very start. For more information on how our firm can help you or if you would like to set up your initial consultation with a member of our team, please reach out to our office now.
What You Should Look For In a Bankruptcy Lawyer
When it comes to choosing the right attorney to help you with your bankruptcy, you may find our law firm is right for you. You may not be sure of how difficult filing for bankruptcy can be, but this will depend on factors like whether you choose to file for Chapter 7 or Chapter 13 bankruptcy, whether you have an asset or no asset case, and if you own different properties or a small business.
What You Can Expect From One of Our Attorneys
When you meet with one of our attorneys for the first time, it is imperative that you are open and honest about all the facts detailing your case. While having the Bankruptcy Means Test done for you and filing for bankruptcy may seem like an embarrassing situation, we respect all our clients and know that this decision was extremely hard to come to. When you work with us, we will outline the different services that our firm will provide for you during the bankruptcy process. Some of these are:
- Choosing whether you should file for Chapter 7, Chapter 13, or another type of bankruptcy and which is the best option for your specific situation.
- What the typical process looks like for bankruptcy and how the details of your case will specifically change this.
- If there is anything about your bankruptcy case that may make it a more difficult process or present more obstacles than usual.
How Pioletti Pioletti & Nichols Can Help
At our law firm, we do not leave you high and dry when it comes to paperwork. Unfortunately, when you file for bankruptcy there are many different forms and packets you can expect to fill out during the process. We specialize in bankruptcy paperwork and can be a part of the process as much as you need. When you provide us with information like your debts, your income, your assets, and your various expenses, we can begin preparing the different forms for your bankruptcy and even help with completing these forms for you.
Bankruptcy can be difficult and it can cause a great amount of stress on you and your family. Don’t face this alone. To find out more about the Bankruptcy Means Test, Chapter 7, and Chapter 13 bankruptcy, call Pioletti Pioletti & Nichols at 309-467-3213 or send us a message online.
Common Questions About The Bankruptcy Means Test
When considering whether you can qualify for Chapter 7 bankruptcy, it’s important to have an understanding of the bankruptcy means test. The means test is designed to determine if an individual’s income is low enough to file for Chapter 7 bankruptcy, which can discharge many of your debts and offer a fresh start. By understanding the details of the means test, you can make informed decisions about your financial future.
What Is The Bankruptcy Means Test?
The bankruptcy means test is a calculation used to determine if a debtor’s income exceeds a certain threshold, which would make them ineligible for Chapter 7 bankruptcy. The test compares your average monthly income over the past six months to the median income for a household of your size in your state. If your income is below the median, you pass the test and can file for Chapter 7. If it’s above, further calculations are needed to assess your disposable income and whether you can repay some of your debts under a Chapter 13 repayment plan.
How Do I Know If I Qualify For Chapter 7 Bankruptcy?
Your income must fall below the median income for your household size in your state in order to qualify for Chapter 7 bankruptcy. If your income is above the median, the means test will determine if you have enough disposable income to repay some of your debts. This involves deducting certain allowable expenses from your income to see if there is sufficient disposable income left over to pay your creditors. If there is very little or no disposable income, you may still qualify for Chapter 7. If you have more disposable income, you might need to consider filing for Chapter 13 bankruptcy instead.
What Information Is Required For The Means Test?
When taking the means test, you will need to provide detailed information about your financial situation. This includes your income from all sources over the past six months, your household size, and a comprehensive list of your expenses. Additionally, you will need to disclose any other income such as bonuses, rental income, or investments. Proper documentation is essential, including pay stubs, tax returns, bank statements, and receipts for allowable expenses. The accuracy of this information is crucial for determining your eligibility for Chapter 7 bankruptcy.
How Is Household Income Calculated For The Means Test?
Household income for the means test is calculated by taking the average monthly income for your household over the past six months. This includes wages, salaries, tips, bonuses, overtime, and commissions. Other sources of income, such as rental income, interest, dividends, pension income, and any contributions to household expenses from other members of the household, are also included. It’s important to include all income sources to ensure an accurate calculation. If your income fluctuates, it’s averaged over the six-month period to smooth out any irregularities.
What Expenses Are Considered In The Means Test?
The means test allows for the deduction of specific expenses to determine your disposable income. These expenses include housing costs, utilities, transportation, food, clothing, medical and dental expenses, taxes, and insurance. Additionally, expenses related to child care, education, and certain other necessary costs can be deducted. The test uses both actual expenses and standard allowances for some categories, so it’s important to understand which expenses are capped by federal standards and which can reflect your actual spending.
Taking The Next Step Towards Financial Freedom
When determining whether Chapter 7 bankruptcy is a viable option, it’s important to understand the bankruptcy means test. The process requires careful calculation and accurate reporting of your financial situation. If you’re considering filing for bankruptcy and need assistance in understanding the means test, our well established legal team is here to help. Our team can guide you through the process, ensuring all necessary information is gathered and correctly calculated. Contact us today for a consultation and take the first step towards regaining control of your financial future.
