Means Testing
Does Means Testing Apply to My Case?
Means Testing only applies to debtors whose debts are primarily consumer debts. For individuals whose debts are primarily business debts (for instance from a failed business or real estate investments), means testing does not apply. In other words, if your debts are mostly non-consumer, you can file for Bankruptcy regardless of your income.
How Much Can I Earn?
If your household income (including earnings from a non-filing spouse) is less than the median income in Virginia for your size household, you qualify for Chapter 7 relief under the means test. Here is the median income in Virginia effective March 17, 2008:
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How Do I Calculate My Income?
The means test uses a rolling monthly average based on your last six full months of income. So if you were unemployed for a period of time, you may still be eligible even if your current salary is above the median income level (so hurry and set up your free initial consultation). You have to count income from all sources, including wages of a non-filing spouse.
What If I Earn Too Much?
GOOD NEWS – many people with an income above the median can still file Chapter 7 bankruptcy. The median income calculation is only the first step of the means test. Depending on your expenses, such as mortgages and car payments, you may still qualify to file Chapter 7, particularly if you are only over by a small amount. If your net income, after deducting allowable expenses, is not enough to allow for a significant repayment of your debts, then you will still be eligible for Chapter 7 relief. Doing these calculations is fairly complicated, but set up a free consultation and let me help you determine whether you qualify.