What is the Means Test in Chapter 7 Bankruptcy?

Learn from our experienced Rockville legal team about your eligibility for debt discharge

If you are struggling with overwhelming debt, Chapter 7 bankruptcy could be your quickest path to a fresh start. By filing a Chapter 7 bankruptcy petition, you begin the process that could discharge your nonexempt debt within a few short months. However, not everyone is eligible to file for Chapter 7 protection. In 2005, Congress enacted bankruptcy law reform that introduced the means test, which determines who is eligible for this type of relief. At Wolff & Orenstein, LLC in Rockville, our legal team is determined to provide the optimal debt resolution answers for Maryland clients. We can advise you regarding the Chapter 7 means test, as part of an overall evaluation to determine your best debt relief options.

Qualifying for Chapter 7 bankruptcy in Maryland

Generally speaking, consumers who earn too much money are not eligible to file under Chapter 7. How much is too much? The primary gauge is the means test, which compares your current income to the average income for households your size. You take the average of your earnings over the last six months and compare them to the published levels. For example, if you file after May 1, 2021, your income would have to fall below:

• Single person — $5,899.08 monthly, $70,789.00 annually
• Couple — $7,535.33 monthly, $90,424.00 annually
• Three-person household — $8,856.83 monthly, $106,282.00 annually
• Four-person household — $10,689.33 monthly, $128,272.00 annually

If your income exceeds these levels, you may still be able to establish eligibility under the means test if you adjust for your allowable expenses. This can be complicated, because the law provides for standard and actual expenses in various categories. Fortunately, our attorneys are well-versed in this area of the law. As part of our assessment, we look at your total sources of income and your eligible deductions to provide an accurate appraisal. If you pass the means test and you have not previously sought bankruptcy protection within the relevant timeframe, you’re ready to file Chapter 7 bankruptcy. If you fail to qualify, you have another bankruptcy option.

Exceptions to the means test exist. For example, if you are a disabled veteran and incurred your debt primarily during active duty or performing a homeland defense activity, you are exempt from the means test.

What are your options if you fail to qualify under the test?

If you are not eligible for Chapter 7 protection due to the means test, you may still be able to obtain bankruptcy relief through Chapter 13. This would establish a repayment plan that lasts for three to five years. But you still get the immediate protection against creditor harassment, lawsuits, home foreclosure and vehicle repossession. Then, at the end of your plan period, the bankruptcy court discharges your remaining eligible debt. Our firm is committed to providing personal assistance, so you can choose the debt relief option that is best for your family and your future.

Ask our Rockville attorneys about the Chapter 7 means test during your free consultation

Wolff & Orenstein, LLC in Rockville helps clients in Montgomery, Frederick and Prince George’s counties take control of their financial future by filing for bankruptcy. To schedule a free initial Chapter 7 bankruptcy consultation, call 301.250.7232 or contact us online. We are conveniently located at 15245 Shady Grove Road, just off the Dwight D. Eisenhower Highway.