THE MEANS TEST
To be eligible to file a Chapter 7 you must be able to pass "The Means Test" unless you are exempt from it.
If you want to have a look at "The Means Test" form used by the Court click here. As you can see it is as complicated as a tax form.
The first step is for an individual or couple to determine their gross income made the previous 6 (six) months (not counting the month you file a bankruptcy) and multiply it by 2.
The second step is to determine if your income is above or below a certain level. If it is below the level, then yes a chapter 7 is possible.
The level of income in the State of Washington is as follows as of November 1, 2009
▪ 1 person- income of $51,344 or less
▪ 2 persons- income of less than $64,158
▪ 3 persons- income of less than $72,533
▪ 4 persons- income of less than $82,716
▪ Additional persons in the household-add $6900 for each.
If your income is at or below the appropriate level you are eligible for file a chapter 7. You do not need to do any further calculations. Go to Getting Started to continue.
The third step, if your income is above these levels, is to perform some additional calculations to see if you qualify. These calculations are confusing and sometimes based on your actual expenses and sometimes based on presumptions of what you spend. The bottom line is that you subtract these expenses from your income to determine what is left.
After deducting these expenses from your income
▪ You have less than $110 left you are eligible to file a chapter 7
▪ If you have $182.50 or more left you can not file a chapter 7 without the bankruptcy judges approval
▪ If you have between $110 and $182.50 left -one more calculation. Figure out how much of your debt is unsecured. Multiply what you have left over per month by 60. If that is 25% or more of your unsecured debt you need the bankruptcy judges permission to file.
If you are unable to file for Chapter 7 due to The Means Test then your other option is filing a Chapter 13.
A Chapter 13 bankruptcy filing allows a person to seek protection of their property and develop a plan of paying creditors by making monthly payments to a Trustee under Court supervision. The plan can be for as little as 36 months or for as long as 60 months.
TTold you this was confusing but...
During our meeting I can do the calculation and let you know if you qualify for a Chapter 7.