What is a Mean Test?

If you are considering filing for bankruptcy you have probably learned that a means test will be conducted. The means test may be referred to as a number of different things, including a statement of monthly income. This is a required filing in every bankruptcy case, regardless of whether you are filing a Chapter 7 or a Chapter 13 bankruptcy. If you are employing an attorney to help you file for bankruptcy you have nothing to worry about. Your experience attorney will ask your for the required information and make sure it is properly reported. If you have not hired an attorney you may want to do so as some of the forms and documents require specialized training.

There are a number of things your attorney is looking for in the means test. He or she will start by using your pay stubs and entering in that information. It is imperative that you provide your attorney with information regarding all sources of income, even including jobs where you are paid cash or sporadic employment. If you are under the median income, and assuming there are no other concerns that would direct you towards a Chapter 13, you will likely be able to file a Chapter 7 Bankruptcy. Median income varies by household size. If after entering your income information it appears that you are over the median income your attorney may ask for additional information. Some of the questions may include whether you have child care expenses, health care expenses, what vehicles you own or operate, and so on. It is possible that after considering expenses your income will still fall under the median and you may still qualify to file a Chapter 7 Bankruptcy.

If your income is still over median income you will not qualify for a Chapter 7 and will have to file a Chapter 13 Bankruptcy. In this case the means test will be used to help calculate your plan payment. After accounting for income and expenses your attorney will be able to determine your disposable monthly income. Your disposable monthly income will likely become the amount you pay each month to your unsecured creditors.

Even with this information, there are a plethora of reasons a debtor might need or want to file either a Chapter 7 or a Chapter 13 Bankruptcy. The decision to file a Chapter 7 should not be based on income qualification alone. There are a number of things to consider, including the nature and amount of assets or types of debt of the debtor.

If you have questions, or would like to schedule a free consultation, contact a St. Louis Bankruptcy Attorney Today.