What is the Chapter 7 Bankruptcy Means Test?
In order to file for Chapter 7 bankruptcy in Georgia, your income must be low enough to show that you cannot reasonably pay your debts. The bankruptcy means test determines if you qualify or if your income is too high for this type of bankruptcy. The test compares your income to that of a family of the same size in your state. If you do not qualify for Chapter 7, a qualified bankruptcy lawyer can help you understand your options.
You are automatically exempt from taking the means test and can file for Chapter 7 if you meet any the following criteria:
- Your debts are primarily non-consumer (business debts).
- You are a disabled veteran and sustained debts during active duty.
- You are in the military reserves or a member of the National Guard and are called to duty prior to filing.
Before you take the means test you must first determine if your income is more or less than the median income in Georgia. Your household income is determined by averaging your monthly income over the last six months. You then multiply your average monthly income by 12 to determine your annual income. As of March 31, 2014, the median family income in Georgia is as follows:
- One earner: $40,631
- Family of two: $52,610
- Family of three: $55,829
- Family of four: $68,085
If your current monthly income is less than the median for a comparable household, you pass and can file for Chapter 7. However, if your income is more than the median, you must proceed with the test, which calculates your monthly income, expenses and debts.
If you pass the means test, your next step is deciding if filing for Chapter 7 is actually the right option for you. If you don’t pass the test but still want to file for bankruptcy, you are limited to filing for Chapter 13.
The means test can be more complicated than it appears. An experienced Chapter 7 bankruptcy attorney at DebtStoppers can help you determine if you qualify for Chapter 7.