Deciding to file for bankruptcy is a big decision and should always be made with the assistance and advice of a qualified St. Louis bankruptcy attorney. However, deciding to file is only the first step of the sometimes complex bankruptcy process. If you are considering bankruptcy, you should always have the guidance of an experienced lawyer throughout the entire process. Call the law office of St. Louis bankruptcy attorney Kenneth P. Carp at (314) 722-5257 for help today.
Completing the means test
One of the first steps in a bankruptcy is determining which type of bankruptcy is best for you. While some people do opt to file under Chapter 13 of the United States Code, the majority of individuals and households wish to file under Chapter 7.1 In a Chapter 7 bankruptcy, any qualified debts will be discharged when your bankruptcy is approved. However, in order to qualify for Chapter 7, you must first pass the “means test.” The means test is meant to prevent people who have enough income to pay their debts from abusing the bankruptcy system.
The means test is a form that requires certain information regarding your income, expenses, and other finances. First, the means test simply determines whether or not your income is below or above the median income for the size of your household in the state of Missouri. The following are the current median incomes2 by household size:
|Number of people||Median income|
These amounts are adjusted often, though an attorney will have the latest numbers regarding state median income. If you are below the median income, you will be able to file for Chapter 7.
If your household is above the median income, you will have to then determine how much disposable income you have. This figure comes from subtracting your expenses from your monthly income. Some expenses are based on state standards, while others can be based on your actual expenses. If you have too much disposable income, the courts will assume you have money to make payments to you debtors and will require you to file under Chapter 13. An experienced lawyer can help you complete the means test accurately so that you can qualify for Chapter 7 whenever possible.