Table of Contents
- Eligibility & the Means Test: Do You Qualify?
- What Is the Bankruptcy Means Test?
- Step-by-Step Breakdown of the Means Test
- What Happens If You Fail the Means Test?
- Understanding Income Thresholds and Expense Deductions
- Self-Assessment: Are You a Good Fit for Chapter 7?
- Why Local Legal Help Matters
- How ReferU.AI Can Help
- Final Thoughts
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Understanding your eligibility for bankruptcy is crucial, and the Means Test plays a significant role in determining whether you can file under Chapter 7 or Chapter 13. This guide will help you navigate the complexities of the Means Test and highlight the importance of consulting a bankruptcy attorney near you for tailored advice and support.
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Discover if you qualify for bankruptcy with our comprehensive guide on the Means Test. Learn about eligibility requirements, key income thresholds, and how a bankruptcy attorney near you can assist you in navigating your options for debt relief.
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Eligibility & the Means Test: Do You Qualify?
If you’re considering bankruptcy, one of the first—and most important—questions is whether you’re eligible to file under Chapter 7 or Chapter 13. That determination depends largely on something called the Means Test—a standardized calculation that compares your income and expenses to determine your qualification. But eligibility goes beyond just numbers on a form.
This pillar guide walks you through everything you need to know about bankruptcy eligibility, the Means Test, and how to assess your situation. We’ll break down the mechanics, highlight common mistakes, and explain the strategies that can help you move forward. We’ll also introduce several detailed guides:
💡 For every post in this series, scroll down to “Related Posts.”
What Is the Bankruptcy Means Test?
The Means Test is a tool used to assess whether you qualify for Chapter 7 bankruptcy, which allows you to discharge most unsecured debt without repayment. If your income is above a certain threshold, you may not qualify for Chapter 7 and might be required to file under Chapter 13, where you repay a portion of your debt over 3–5 years.
The test consists of two parts:
- Income Comparison: Is your income below the state median?
- Expense Deduction: If your income is higher than the median, do you still have minimal disposable income after allowable expenses?
Step-by-Step Breakdown of the Means Test
Refer to How to Calculate the Means Test Step-by-Step (With Examples) for a full walkthrough. But here’s the quick version:
- Calculate your average income over the past 6 months.
- Multiply by 12 to get your annual income.
- Compare it to your state’s median income for your household size.
- If it’s lower, you qualify. If higher, subtract allowed expenses to determine disposable income.
What Happens If You Fail the Means Test?
Failing the Means Test doesn’t mean all hope is lost. As detailed in What if You Fail the Means Test? Alternative Options and Strategies, you may:
- Still qualify for Chapter 13 (which can protect your home or car)
- Adjust your expense deductions
- Wait and refile if your income is expected to drop
- Demonstrate special circumstances to override the test
Failing is not the end—it’s a pivot point. A bankruptcy attorney near you can help you assess which strategy fits your situation.
Understanding Income Thresholds and Expense Deductions
Income limits vary by state and household size. Even if you’re over the median, many filers still qualify for Chapter 7 after allowable expenses are deducted. Learn more in Income Thresholds, Expense Allowances, and Common Pitfalls.
Key expenses include:
- Housing and utilities
- Transportation costs
- Insurance premiums
- Medical expenses
- Secured loan payments (car or mortgage)
Common mistakes include misreporting income timing, omitting income sources, and overstating non-deductible expenses. Getting these right is critical.
Self-Assessment: Are You a Good Fit for Chapter 7?
Sometimes you just need a plain-English tool to evaluate your options. Our Self-Assessment Checklist: Are You a Likely Candidate for Chapter 7? provides an easy way to assess:
- Income levels
- Debt types
- Disposable income
- Asset values
- Credit profile
If you meet most of the checklist criteria, you may be a strong candidate for Chapter 7. If not, your attorney can help tailor a strategy based on your goals.
Why Local Legal Help Matters
Bankruptcy is a federal process, but state rules and exemptions matter deeply—especially in Means Test calculations. A bankruptcy attorney near you understands both the national framework and your local rules. They can:
- Maximize your exemptions
- Ensure accurate calculations
- Challenge unfair creditor objections
- Build a stronger case for discharge or repayment relief
How ReferU.AI Can Help
ReferU.AI connects you with the right bankruptcy attorney near you, matched to your situation, location, and chapter eligibility. Our platform ensures you’re guided by someone who knows your state’s income thresholds and exemption rules—and who can help you make the best decision possible.
Final Thoughts
Bankruptcy eligibility isn’t just about passing a test—it’s about choosing the right path forward. Understanding the Means Test is a critical first step, but don’t stop there. Explore your full legal options, evaluate your budget and goals, and connect with a professional who can help you make a confident, informed decision.
If you're ready to explore your options, let ReferU.AI match you with a qualified bankruptcy attorney near you—and start your path toward debt relief today.
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