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Kelley, Fulton, Kaplan & Eller West Palm Beach Bankruptcy & Business Attorneys
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Do I Need To Pass The Means Test For Bankruptcy?

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When you are planning to file for bankruptcy, it is critical to understand what the eligibility requirements are for the type of bankruptcy you are considering and whether you meet those eligibility requirements. There are different eligibility requirements for different chapters of bankruptcy, and then there are distinct requirements depending upon whether the debtor is an individual or a business. If you are considering bankruptcy and you have conducted some preliminary research into the eligibility requirements, you may have come across information about something known as the “means test.” Do you need to pass the means test and, if so, what is required to pass? Our West Palm Beach bankruptcy lawyers can tell you more about the means test and when it is relevant to a bankruptcy case in Florida.

When Does the Means Test Apply to a Bankruptcy Case? 

The means test is only applicable to Chapter 7 bankruptcy cases, and it only applicable to individual or consumer bankruptcy cases under Chapter 7. To be clear, although both businesses and individuals can be eligible to file for Chapter 7 bankruptcy, businesses never need to pass the means test. The means test only applies to consumers who are filing for personal bankruptcy under Chapter 7.

Even for consumers planning to file for Chapter 7 bankruptcy, it is important to determine whether you are eligible to file for bankruptcy without having to pass the means test. Who has to take the means test and who does not? As the U.S. Courts explain, “if the debtor’s current monthly income is more than the state median, the Bankruptcy Code requires application of a ‘means test’ to determine whether the Chapter 7 filing is presumptively abusive. According to the Florida Department of Health, the median statewide income in 2020 was $48,038. If you are planning to file for Chapter 7 bankruptcy in West Palm Beach and have an income below the statewide median in Florida, you may not be required to pass the means test in order to be eligible for a liquidation bankruptcy.

What Do You Need to Do In Order to Pass the Means Test? 

If your income is above the statewide median in Florida and you want to file for Chapter 7 bankruptcy, you will need to pass the means test to show that a liquidation bankruptcy is not presumptively abusive. What do you need to do in order to pass the means test?

There are multiple elements to the means test, but broadly speaking, you will need to determine whether your gross income is low enough to qualify, and if not, whether you have enough deductions that your income ultimately is low enough to qualify for Chapter 7 bankruptcy.

Contact a Bankruptcy Attorney in West Palm Beach 

Do you have questions about filing for Chapter 7 bankruptcy as a consumer, or do you need assistance filing for Chapter 7 bankruptcy as a business? You should seek advice about liquidation bankruptcy from a lawyer who can help. One of the experienced West Palm Beach Chapter 7 bankruptcy attorneys at Kelley, Fulton, Kaplan & Eller can provide you with more information about the eligibility requirements for Chapter 7 bankruptcy as a business or an individual, and we can begin working with you on your bankruptcy case today.

Sources:

uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/chapter-7-bankruptcy-basics

flhealthcharts.gov/ChartsReports/rdPage.aspx?rdReport=NonVitalIndRateOnly.DataViewer&cid=293

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