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What is the Chapter 7 means test?

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Chapter 7 bankruptcy is one of the most popular bankruptcy chapters among consumers. This is because the process is over very quickly in comparison to other options. In addition, Chapter 7 bankruptcy filers tend to benefit from large debt discharges.

However, Chapter 7 bankruptcy is not available to all debtors. In order to qualify, you must pass a means test. This test is conducted to verify whether you have an income that is sufficient to pay back your debts in a realistic time period. If your income is not deemed to be sufficient, you will be able to file for Chapter 7 bankruptcy.

How low does my income need to be in order to qualify?

In general, the higher your income, the less chance you have of qualifying for Chapter 7 bankruptcy. There is no specific income amount that is considered to be the cut-off point. Instead, there are two ways to qualify through the means test.

First, if your monthly income is less than the median income in South Carolina for a family of your size, you will automatically pass the means test.

If your income is higher than the median, you may pass the test in another way. Your income is correlated with the amount of debt that you have. If you can show that you do not have enough disposable income to pay back some of your debts each month, you may be able to file for Chapter 7 bankruptcy.

If you want to benefit from a Chapter 7 bankruptcy, it is important that you learn about the ways you can maximize your chances of passing the means test.