Chapter 7 bankruptcy is a type of bankruptcy reserved for individuals at or below the median annual income in the state of Indiana. When you don’t meet the median income, the means test is used to determine whether you’re still eligible to file for Chapter 7 bankruptcy. Because income isn’t always straightforward, this test allows you to calculate, subtract, or include various streams of income.
The means test can be confusing and filing for bankruptcy can be equally as complicated. At Rowdy G. Williams Law Firm, our attorneys have an in-depth understanding of both Chapter 7 bankruptcy and other routes you may be eligible to take. A Terre Haute bankruptcy lawyer from our firm can assist you in all steps of the process.
Exemptions to the Chapter 7 Means Test
There are exemptions to the means test for some individuals. For example, if the majority of your debts are non-consumer debts, or if you’re a disabled veteran who incurred your debt during active duty or while performing homeland defense, then you’ll be exempt from the means test, regardless of your income.
The means test isn’t needed to determine eligibility for Chapter 7 bankruptcy if your annual household income is at or below the family median income in the state of Indiana. You can determine this number by averaging your household income over the last six months.
For a one-person household, the annual median income is $41,250. For a two-person household, the annual median income is $51,926. For a three-person household, the annual median income is $61,021. For a four-person household, the annual median income is $71,113. As household members increase, income increases. A 10-person household has an annual median income of $119,713.
The Means Test
If your income is over the annual median income, you’ll need to calculate your income and expenses. Rental income, business income, interest and dividends, pensions and retirement plans, and household expenses should all be included in your test. If you calculate that your total monthly income is less than $7,475 over the next sixty months, then you’ll be eligible for Chapter 7 bankruptcy.
If you calculate that your monthly income is over $12,475, then you fail the means test and won’t be eligible for Chapter 7 bankruptcy. If your income falls somewhere in between $7,475 and $12,475, you may need to do more calculations to determine your eligibility.
Reach Out to a Terre Haute Bankruptcy Attorney
The means test can be a complicated process, and having an experienced attorney help you through it can take some of the pressure off of you. If you’d like to discuss your case with an experienced Terre Haute bankruptcy lawyer from Rowdy G. Williams Law Firm, call 1-812-232-7400 or fill out the contact form below to schedule a free consultation.