What is a Means Test


If you’re thinking that bankruptcy may be the best option for your financial situation, you’ll need to do some research before making your final decision. There is some new terminology to learn and unfamiliar steps to take in order to move toward financial freedom. We can help you by discussing the types of bankruptcies available and the requirements you’ll need to meet for filing.

What is Involved with a Means Test?

The first thing we will do is to conduct a Means Test. By looking at a few different factors, we will be able to determine if you have the “means” to pay off your debt. In order to pass the Means Test, your income will need to fall below the median income for a family of your size, living in your area. If you make less than the median income, you automatically qualify for a Chapter 7 bankruptcy. If you make more, our next step is to look at your disposable income. For this calculation, we look at your fixed expenses, such as mortgage or rent, utilities, insurance, and other basic needs. This amount is subtracted from your income to come up with your disposable income. If you have enough disposable income to continue making payments on your debt, you do not pass the Means Test. However, if your disposable income is low, you will qualify for a Chapter 7 bankruptcy.

How does a Means Test Affect You?

So, how does passing or failing the Means Test affect you? The Means Test will tell you if you qualify for a Chapter 7 bankruptcy. With a Chapter 7, most of your debt is discharged or wiped out, since you do not have the means to pay that debt. For many, this is an opportunity to get a new start after years of struggling to make payments on debts that just seem like they will never go away. If you fail the Means Test, you may still be able to get financial relief through a Chapter 13 bankruptcy. Also, just because you pass the Means Test, that doesn’t mean a Chapter 7 is the best option for you. When you file a Chapter 13, you are given a payment plan to get on top of your debt over a 3-5 year period. This allows you to keep your property and to make choices to live within your means. During the years of your Chapter 13, your financial and life circumstances may improve, enabling you to pay off your debts as you had originally intended.

Get Help Now

With our years of experience, we’re confident that we can give your financial situation a thorough assessment, starting with the Means Test. Using those results, we can recommend next steps to getting back on your feet with a clean financial slate. Contact us today to get started. Click here if you need a Eugene bankruptcy attorney , or check here for our other Oregon and Washington locations.