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Kindlund Legal LLC.
  • Breaking Down The Chapter 7 Means Test

    • By: Kindlund Legal LLC
    • Published: March 1, 2021

    You are certainly not alone in your struggles with debt (nor are you alone in your desire to want to deal with them in the best way possible). For many people in Maryland, seeking personal bankruptcy protection is the best option to re-establishing themselves on a firm financial footing.

    Chapter 7 is by far the most popular form of personal bankruptcy. Most people come to us here at Kindlund Legal LLC wanting to file under this Chapter (no doubt due to the benefit it offers of having certain debts discharged). If you also want to no more about potentially filing for a Chapter 7 bankruptcy, however, the most important point to understand is that you first must qualify.

    Protecting against abusing the benefits offered by bankruptcy

    Your ability to file under Chapter 7 depends on the outcome of a means test. The privilege of having debts discharged is not one federal authorities want to see abused. Thus, the means test helps determine whether you truly are not in a position were the court could reasonably expect you to repay your debts.

    According to the website for the Federal Judiciary, the first step in the means test is to compare your aggregate monthly income to that of your particular demographic in Maryland. If it is below the median amount, you automatically qualify. If not, you proceed on to the next phase.

    Comparing your income to your debts

    The next phase of the means test involves projecting your monthly income out over a period of five years (minus certain allowable monthly expenses). If it is below either $12,850 or 25% of your non-priority unsecured debt, then you qualify to file under Chapter 7.

    You can learn more about managing a personal bankruptcy case by continuing to explore our site.

    Jillian Kindlund

    Call Now For A Complimentary Case Evaluation
    (240) 997-5775
    Former Chapter 7 Trustee

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