The Bankruptcy Means Test – The Formula To Help You File

Bankruptcy Lawyers in Atlanta GAWhen it comes to filing for bankruptcy, there are various ways to do so, depending on income and the type of debts owed. While most attempt to file Chapter 7 bankruptcy, which wipes all out debts, the bankruptcy “means test” has become the standard formula to help determine if one is eligible to file Chapter 7 bankruptcy. In essence, the means test begins by considering gross monthly income over a six- month period, and how it compares to the average income for a household of the same size in that county or state. If a person’s monthly income is less than average, they are free to file Chapter 7 bankruptcy. Even so, not all means tests are this simple.

In some instances, individuals can earn significant income on a monthly basis and still qualify for Chapter 7 bankruptcy. These filers must demonstrate a lot of expenses, including a high mortgage and/or car payments, taxes and more. It all comes down to disposable income, and how much can actually be applied to creditors after all other expenses have been paid. NOLO reports that the means test was designed to limit the use of Chapter 7 bankruptcy, and it does so by deducting specific monthly expenses from a person’s “current monthly income” to arrive at their “disposable income.” Based on the amount of disposable or “usable” income at the end of the month, it is determined if it would be beneficial for the individual to file Chapter 7 bankruptcy.

Another consideration of the means test is consumer debts versus business debts. For instance, only those with mostly consumer debts need to take the means test. Some of these debts include household furnishings, clothing, food, vacation expenses, collectible items, sporting equipment and entertainment expenses.

For those hoping to file for Chapter 7 bankruptcy, it can be an overwhelming and stressful decision. That’s why it’s important to seek guidance and legal counsel from knowledgeable and experienced bankruptcy attorneys like Ira D. Gingold and Jamie L. Gingold.

Gingold & Gingold, LLC, are esteemed bankruptcy attorneys in the Atlanta metro area with decades of experience in helping individuals and families find financial relief and freedom. Even if your bankruptcy filing is a complex one, you can rest assured that we are equipped to advise you with filing, preparing and submitting all of the necessary paperwork to get you going in the right direction. For a free consultation to discuss your personal financial situation, contact the office of Gingold & Gingold, LLC in Atlanta today. 


Gingold & Gingold LLC
1718 Peachtree St NW, #385
Atlanta, GA 30309
(404) 685-8800