November 16, 2016 By:
Congress’ clear purpose behind the means test was to make it harder for some people to file Chapter 7. The idea was that those who have the means to pay a meaningful amount of their debt to their creditors in a three-to-five-year Chapter 13 payment plan ought to do so, instead of being allowed to just write off all their debts in a Chapter 7 case.
The means test is potentially a messy, multi-level test. The good news for most people is that they can pass the income part of the test. That involves comparing their “current monthly income” to a published “median family income” amount. If your income is no more than the median, then you can file a Chapter 7 case. You don’t have to mess with the rest of the test, particularly the complicated expenses portion of the test.
This is a very precisely definition of “income,” and one that can have odd consequences. Here’s how it is calculated.
1 EARNER | 2 PEOPLE | 3 PEOPLE | 4 PEOPLE* |
$44,230 | $59,366 | $62,710 | $72,698 |
* Add $8,400 for each individual in excess of 4. |
(These median income amounts are valid for case filed from Mar 1, 2016 through the next time they will be changed, likely in October or November 2016. Check this website to see if these amounts have been adjusted, and to determine the new median amounts.)
If your annual income, calculated exactly as described above, is no larger than the median income amounts for your family size in the table, then you have cleared the means test hurdle. You can skip the expenses portion of the test.
Or, to get an answer if you are in the Dallas-Fort Worth Metroplex, call me so I can help you with all this. I’m Carrie Weir, a highly experienced Texas bankruptcy lawyer. I serve the areas around Rockwall, Heath, Greenville, Lavon, Wylie, Mesquite, Royse City, Sachse, and Rowlett. Please contact me for a free and confidential consultation. Just call me at 972-772-3083 or use the contact form here. Thank you for reading this blog post.