Means Testing

While bankruptcy laws became somewhat more stringent in 2005, many people who are dealing with serious debt are still qualified to file for relief. If you’re unsure whether you are eligible to file for bankruptcy, our Minnesota bankruptcy lawyers here at Ryan & Grinde will be able to help you evaluate your financial situation. Based out of Rochester and St. Charles, Minnesota, we can help you navigate the difficult mathematical terrain of doing a means test to determine whether you qualify for bankruptcy.

What Is A Bankruptcy “Means Test”?

Chapter 7 means testing tells you whether your income qualifies you to file for Chapter 7 bankruptcy. The purpose of this formula is to prevent individuals with high incomes from filing for Chapter 7 bankruptcy. If a high-income filer doesn’t pass the test, he or she can file for Chapter 13 bankruptcy to repay some of their debts. However, anyone who doesn’t pass the test cannot wipe out their debts entirely with Chapter 7 bankruptcy. However, simply because you have a high income does not mean you won’t pass the means test. If you have a substantial amount of expenses, you may still pass.

How Does The Means Test Work?

The means test determines whether you can pay your debts by deducting monthly expenses from your current monthly income to calculate your disposable income. Your current monthly income is determined by averaging the income you earned over six calendar months prior to filing for bankruptcy. Filers with a higher disposable income won’t be able to file for Chapter 7 bankruptcy. Only filers who have mostly consumer debts rather than business debts will have to take the means test before filing for Chapter 7 bankruptcy.

Contact Us

For more information about the means test and qualifying for Chapter 7 bankruptcy, contact the attorneys of Ryan & Grinde for a reduced flat fee $150 initial consultation with Ryan & Grinde. Call us at 507-282-8118 or contact us online.

As to bankruptcy matters, we are designated a debt relief agency under the BAPCPA. We help people file for bankruptcy relief under the Bankruptcy Code.