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Passing the Means Test for Chapter 7 Bankruptcy in Pennsylvania

When you are filing for bankruptcy, you need to know that every case is unique from the other. Rather the process is divided into chapters according to the U. S. Bankruptcy Code. While most of the consumers file under either chapter 7 or chapter 13, chapter 11 is primarily designed for businesses. While most of the consumers file for chapter 7 bankruptcy, they are trying to wipe out their debts chapter 13 can help the debtor restructure the payment plan. However, Chapter 7 is more popular as it gets over in a short time and is reduces financial burdens while compared to chapter 13. However, if you are filing for Chapter 7 bankruptcy, you are required to qualify for that. And the process for qualifying for this chapter is to go through a Means Test. How can you pass the test? Read what our experienced Pittsburgh bankruptcy lawyer has to say.

The Definition of Means Testing

While chapter 13 bankruptcy is for those debtors who have the means or income to take care of the reduced debt with a restructured payment plan, chapter 7 is for those debtors who are facing this situation for some unprecedented circumstances and are in greater need of relief. This norm cannot be abused by those who can afford to pay according to the repayment plans of chapter 13. That is why the Means Test has come into existence since 2005.

The Means Test is a fairly simple procedure that compared your income against the median income of a family of your state of similar size. If you have lower income than that, then you will qualify for filing bankruptcy. And if you have higher income, then you will be directed towards chapter 13 bankruptcy. Now, you need to consult a Pittsburgh bankruptcy lawyer in order to pass the means test and qualify for chapter 7 bankruptcy.

According to the reports of the Department of Justice, the following is the median income of families by different sizes that is applicable for the cases filed on and after 1st November 2014.

  • 1 earning member = $48,200
  • 2 people = $56,946
  • 3 people = $71,703
  • 4 people = $84,396

For a larger household, you need to add $8,100 in the calculation.

To qualify the Means Test, you need to deduct a few expenses.

Expenses for Deduction

If you do not qualify for Means Test, it means that you have the disposable income to take care of the repayment. But to be eligible for Chapter 7, you need to show that your spending are also major that eat away most of your disposable income which prevents you from affording to go by the repayment plan of Chapter 13.

In this case, you can go for the deduction the following expenses.

  • The cost of caregiving for terminally ill or elderly member which can help you in deduction of transportation and treatment costs
  • Charity donation for which you have to produce documents showing you donate there regularly and are planning to continue with it
  • Child care includes the costs of babysitting and daycare costs as the government recognizes that child care is not inexpensive
  • Domestic support including child support and spousal support or alimony
  • Education of mentally and physically disabled children
  • Health, disability, or term life insurance
  • Involuntary Employment Expenses like the costs of the uniform and so on
  • Secure debts including mortgage or car loan
  • Income tax obligation

Consult our Pittsburgh bankruptcy lawyer so that you can pass the Means Test easily and get qualified for Chapter 7 bankruptcy. Pittsburgh Bankruptcy Law Group is here to help you.

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