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The Chapter 7 Bankruptcy Means Test

The Colpitts Law Firm, Trusted Bankruptcy Attorneys for over 22 Years

If you are considering filing for bankruptcy, the first step is to see if you are eligible. The bankruptcy means test is the name of the process for determining if individuals qualify to file for debt forgiveness through Chapter 7 bankruptcy. The formula is designed to prevent high-wage earners from filing for bankruptcy.

Greggory T. Colpitts is a board-certified attorney in Tulsa who specializes in bankruptcy law. He and The Colpitts Law Firm are qualified to answer all of your questions about bankruptcy and help you determine if you are qualified. If you are, we can guide you through the necessary steps of filing for bankruptcy.

Contact us at (918) 302-2662 today to find out if you qualify to file for Chapter 7 bankruptcy.

How the Test Works

The bankruptcy means test is meant for those who have consumer debts, like debt from credit cards or medical expenses. The test is designed to reveal if an individual has any disposable income that could be used to pay off debt.

The test has two parts: The first part determines whether your household income is below the median state income. Your income for the past six months is calculated by combining several possible sources.

Sources of income include:

  • Wages, salary, tips, bonuses, overtime, commissions
  • Interest, dividends, and royalties
  • Rental and real property income
  • Gross income from a profession, business, or farm
  • Retirement and pension income
  • Annuity payments
  • Workers’ compensation
  • Unemployment compensation
  • State disability insurance
  • Regular spousal support or child support

If the resulting calculation shows that a debtor’s income is less than or equal to the state median, they have passed the means test. However, if the debtor makes more than their state’s median income, in order to be eligible for bankruptcy they must pass a second part of the means test.

The second part of the test involves calculating expenditures over the last six months. Certain costs such as rent, clothing, groceries, car payments, and medical costs are considered to be “allowable expenses.” The allowable expenses are subtracted from total income and result in the amount of disposable income that is available to pay off debts. If this is low enough, an individual may still qualify for Chapter 7.

It is very important to calculate these as accurately as possible, as an omission of items or conflicting amounts for the same expense can result in your application being rejected. For this reason, it is highly recommended that you hire a bankruptcy attorney to keep you from making crucial mistakes.

Attorneys You Can Count On

We’ve only been able to scratch the surface of all the complicated bankruptcy laws. For help attaining accurate calculations of your income and expenses in order to avoid penalties, reach out to our team. We have helped several Oklahomans overcome their debilitating debt and find their way to a brighter future.

Contact us online or call (918) 302-2662 to get started on your case.

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“Our knowledge and experience give us an unparalleled ability to move difficult cases through the bankruptcy system smoothly.”

- Greggory T. Colpitts
Board Certified in Consumer Bankruptcy
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