≡ Menu
Home > What Is The Means Test And How Does It Affect My Bankruptcy Filing?

What Is The Means Test And How Does It Affect My Bankruptcy Filing?

In 2005, Congress passed a reform of America’s bankruptcy laws that was designed to minimize some of what had been viewed as abuse of the bankruptcy system.

One addition to bankruptcy law was incorporating a “means test” into Chapter 7 filings.

The intention is that high-earning debtors seeking bankruptcy protection should be excluded from simply wiping out their debts, and instead forced into a Chapter 13 filing, which will require some repayment.

To know whether you need to bother with the means test, you’ll need to calculate your current monthly income and compare it to the median income for a household of your size in New York.

If you earn less than the median income, you qualify to file Chapter 7 bankruptcy. If you earn more than the median income, your earnings and expenses will be tallied to arrive at a figure called your “disposable income.”

If your disposable income is above a given amount based on factors like your household size, you cannot file for Chapter 7 protection.

Whether you pass the means test or not, the bankruptcy attorneys at Zelenitz, Shapiro & D’Agostino can help you get clear of the burden of creditors and endless debt.

Call us today at 718-599-1111for a free consultation.