Passing the means test to file for Chapter 7 bankruptcy | The Colpitts Law Firm
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Passing the means test to file for Chapter 7 bankruptcy

Most people in Oklahoma have plans with certain goals for their lives. Many goals revolve around how they will manage their finances. Despite their plans, some find themselves struggling due to unexpected events, such as job losses or medical conditions. Because these events can have significant financial impacts, some people begin looking at their options in regards to filing for bankruptcy. There are two options that may be the answer to a person's financial woes -- Chapter 13 or Chapter 7 bankruptcy.

Chapter 13 bankruptcy allows a debtor to restructure his or her debt payments. This allows the person to get caught up on certain debts -- including back taxes, credit card bills and medical expenses -- over the course of time. On the other hand, Chapter 7 bankruptcy, which results in debts being forgiven, may be the best option for some. To qualify, applicants must first pass a means test.

Some argue that the means tests is fairly easy to pass. Reports indicate that 88 percent of applicants passed it in 2013. The test looks at whether the household income is below the state's median. To prove this, a person must gather documents related to his or her income for the past six months. A change -- such as the loss of a job or a newer job at a higher wage -- that occurred within that six-month period will be taken into consideration.

If the person does not pass the means test during step 1 but still wants to pursue Chapter 7 as an option, he or she can proceed to step 2. In this step, he or she must gather all of the documents related to allowable expenses, such as medical bills, rent, medical costs or clothing. Any remaining income is considered disposable and is to be used to pay off debt. If low enough, however, the person passes the means test. If not, Chapter 13 may still be an option.

There is no need for people to continue to struggle with overwhelming debt. An experienced bankruptcy attorney in Oklahoma can help determine which option is best for each individual situation. Additionally, such a professional can ensure that necessary information is gathered and conflicting information is not given.

Source:, "The Bankruptcy Means Test: What It Is, Why It Matters", Sean Pyles, July 14, 2016

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