If you wish to file a Chapter 7 Bankruptcy, you will have to first pass something called the MEANS Test. The MEANS Test is the determination of whether or not you are eligible to file a Chapter 7 Bankruptcy based upon your household size and income.
For a Chapter 7, your income must be below the median income level for your household size in your state. In order to figure out what your income is, the court looks at an average of your monthly income for the previous six months prior to filing. In Florida, as of April 1, 2017, the median income numbers are around the following and increase as your household size increases:
Household of 1: $44,576.00
Household of 2: $55,344.00
Household of 3: $60,636.00
If your median income is below these numbers for your household size, you only have to complete the “short-form means test.” This is because it is easy to determine that you qualify for a Chapter 7, because your income is clearly under the median.
If your median income is above these numbers, you will have to complete the second part of the MEANS Test. The second part of the MEANS Test, the “long form,” does a further determination/analysis of whether your income and expenses allow you to qualify for a Chapter 7. Things such as a mortgage or car payment can help you to lower your monthly income in hopes that it’s just enough to help you qualify for a Chapter 7 Bankruptcy.
What types of income are included in the MEANS Test?
Now that you know how it is determined if you can file a Chapter 7 Bankruptcy, you probably would like to know what income is included in the MEANS Test. While ALL types of income must be listed on your Schedule I, which lists your monthly income in the future, NOT ALL types of income are included on your MEANS Test, but unfortunately, most are.
Income from regular employment, running a business, pension, retirement, etc. all must be included in your MEANS Test, even child support and alimony payments are included in your MEANS Test. The only income that is not included in your MEANS Test is disability income, such as Veteran Affairs Disability and Social Security Disability.
What this means is that even if your income is too high to qualify for a Chapter 7 Bankruptcy due to your social security or VA benefit, you might not have to include that income in your MEANS Test, because, without it, you might be able to qualify for a Chapter 7 Bankruptcy.
One of the first steps to filing bankruptcy is determining whether or not you pass the MEANS Test and qualify for a Chapter 7 Bankruptcy.
Contact the Law Office of David M. Goldman, PLLC today to evaluate whether or not you will pass the MEANS Test. Other factors such as any assets you might have also need to be taken into account when deciding whether bankruptcy is the best option for you.