Bankruptcy Means Testing

Under the abuse prevention provisions of the 2005 Consumer Protection Act, Congress established a means test for individuals who need to file for bankruptcy. The provisions stipulate that individuals who have income in excess of their applicable state median income are subject to evaluation. Means testing determines an individual’s ability to pay a portion of their disposable income to their creditors.

The means test is carried out based upon the information contained in the monthly income statement. This is one of the forms that you must submit during the filing process. The debtor must also answer questions about income levels, debts and the ability to meet certain obligations during the mandatory meeting with creditors. The debtor’s annual income is compared to the state median income based upon family size. Income from all sources is used to determine the amount of disposable income that remains after your permitted monthly expenses are subtracted. If the person filing for bankruptcy is deemed able to pay $109.58 per month for a period of 60 months, they are ineligible for Chapter 7 bankruptcy and must file under the provisions of Chapter 13.

If you are considering filing for bankruptcy, you need to consult an attorney who is familiar with bankruptcy proceedings. We can assist you by evaluating your situation and determining whether you are eligible to file for Chapter 7.

Give us a call so we can help you work out your bankruptcy filing questions here in Ft Collins!