The Means Test is used to determine whether your income will allow you to file a chapter 7 bankruptcy.
This is done by looking at your earned gross income from most sources over the last 6 months. I say most sources, because not all income is calculated. Social security funds and veteran’s benefits are not used in the calculation. The calculation does not include the month your case will be filed on. For example, if your bankruptcy case will be filed in December, the calculation will consist of June through November.
After your income has been calculated for the 6 months prior. There needs to be a determination on whether your income falls below the state’s median. Each state has set income amounts based on household size and median family data. As of today, in Minnesota, for a household of 1 the amount is $61,811, a household of two $81,478, a household of three $100,430, and a household of 4 $118,646. If your household size is any larger than 4, you will add $9,000 for each additional person.
What happens if you fall below or above the income amounts for your state? If you fall below, great! You qualify for a chapter 7 based on your income. If your income is above the amounts for your state and household size, you have a couple of options. Option one is filing a chapter 13. In a chapter 13 the calculation will determine whether you can have a 3 year or 5 year plan.
Option two is completing an extended version of the Means Test, where you give detailed amounts on the expenses that you have. This will determine your disposable income after your expenses.
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The means test calculation can be confusing. Let the attorneys at Kain and Scott handle the calculation for you. Visit www.kainscott.com today. You will be glad you did.
