Oklahoma Bankruptcy Means Test

In order to file for chapter 7 or chapter 13 bankruptcy, you must first passBankruptcy Means Test | South Tulsa Bankruptcy Lawyers the Bankruptcy means test. The test differs for chapter 7 and chapter 13 petitioners. For instance, there are certain monetary thresholds under the chapter 7 bankruptcy means test that once reached, prohibit a debtor from filing. As an alternative, the debtor may be able to file for chapter 13 bankruptcy subject to secured and unsecured debts monetary thresholds. Read on to learn more about passing the chapter 7 and chapter 13 means test to file for bankruptcy.

What is the Bankruptcy Means Test?

Under the Bankruptcy Reform Act of 2005, the “means test” was implemented.  This determines whether a person qualifies for chapter 7 bankruptcy. The bankruptcy means test requires a debtor to make a specified amount of income in order to qualify for chapter 7 bankruptcy. The debtor’s income is compared to the median income for a similarly sized family within their locale. If the debtor’s income is less than the median income for a similarly sized family, then they pass the means test. If a debtor does not pass the means test, then they may seek relief under chapter 13 bankruptcy (assuming the debtor passes the chapter 13 means test).

How Does Chapter 7 Bankruptcy Means Test Work?

Step 1 Income Based  

To determine your income under the chapter 7 bankruptcy means test, you will need to add up all the income you have received from all sources throughout the past six months. Such income sources include the following:

  1. All wages, including salary, tips, bonuses, overtime, and sales commissions
  2. Gross income from a business, profession, or farm
  3. Income from child support or spousal support
  4. Unemployment compensation
  5. Pension and retirement income
  6. Workers’ compensation
  7. State disability insurance
  8. Annuity payments
  9. Income from rental property
  10. Interest, dividends, and royalties

Once you determine your income from the past six months, you can either divide by 6 to determine your current monthly income (CMI), or you can multiply by 12 to determine your yearly income. Compare your CMI or yearly income with the median income for a similarly sized family within your locale. As mentioned above, if your income is below the median income for your family size, then you pass the means test. If it is above the median income, please proceed to step 2 below.

Step 2 Income Expenses Subtraction

If your income is more than the median income for your family size, then you will need to deduct qualified expenses from your income to determine if you meet the median income amount. Income expense deductions include some of the following:

  1. Medical expenses
  2. Vehicle payments
  3. Housing expenses
  4. Taxes
  5. Health insurance
  6. Child care

Check your CMI, or yearly income, after the deductions are made to see if you qualify.

How Does Chapter 13 Bankruptcy Means Test Work?

Under chapter 13 bankruptcy means tests, any debtor who earns more than the median income for their state of residency must file a 60 month repayment plan. Debtors who earn less than the median income for their state of residency must file a 36 month plan.

You will not qualify to file for chapter 13 bankruptcy if your secured debts exceed $1,149,525. Additionally, your unsecured debts cannot exceed $383,175.

Contact a Tulsa Oklahoma Bankruptcy Attorney:

We invite you to contact our bankruptcy attorneys in Tulsa to find out if you qualify to file for chapter 7 or chapter 13 bankruptcy. Our experienced bankruptcy attorneys can provide you with various debt relief options that best suit your needs. Most importantly, our attorneys are here to help you secure a stable financial future and eradicate your qualified debts within a timely manner.

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