Avoiding the Means Test in a Chapter 7 Bankruptcy Filing

The Limited Circumstances Where You Don’t Have to Submit to the Means Test

Avoiding the Means Test in a Chapter 7 Bankruptcy FilingWhen American bankruptcy law was amended in 2005, the framers of the revised Bankruptcy Code, with the intent of reducing the number of Chapter 7 petitions, added a requirement that debtors qualify for Chapter 7 by submitting to a means test. That test is designed to determine whether the debtor has the “means” to repay creditors over a three-to-five-year period. Though the common perception is that all Chapter 7 filers must meet the provisions of the means test, there are a few exceptions:

  • The disabled veteran exception—If you have a disability that you incurred while serving in the United States armed forces, and your disability is rated at least 30%, you can file for Chapter 7 protection without submitting to the means test, provided you were discharged from the military because of your disability.
  • The exception for actively-deployed reserve and National Guard members—If you served as a member of the National Guard or reserves of any branch of the military after September 11, 2001, you can request an exemption from the means test.
  • The business debt exception—Under the revised bankruptcy laws, the means test applies only to debtors with “primarily” consumer obligations. In fact, the first page of the means test asks whether most of your debts are business-related. If you answer yes, you don’t have to complete the rest of the document. Though Congress did not define “primarily” when it enacted the changes to the bankruptcy laws, as a practical matter, most courts simply require that a majority of debts be consumer debt.

Contact Heath, TX Bankruptcy Attorney Carrie Weir

I offer a free initial consultation to all potential bankruptcy clients. Contact my office by e-mail or call me at 972-772-3083 for a private meeting. With offices in Rockwall, Texas, I represent clients in Heath, Greenville, Lavon, Wylie, Mesquite, and Rowlett.

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