What is Bankruptcy Means Test?

Hello. This is Roger Ghai, and I wanted to talk today a little bit about filing Chapter 7 bankruptcy and what is a means test in the state of Georgia. First of all, the means test is one of the ways that we determine whether you qualify for filing a Chapter 7 bankruptcy. It is an income threshold or an income limit that you can earn as an individual or as a couple or as a family. As of May 20, 2020, the income limit, for example, for a single individual to be able to file bankruptcy is approximately $49,000. If we have two people, we’re looking at $63,000. If we’re looking at three people, we’re looking at $72,000 or so. Four people, we’re looking at a family of four would be about $85,000. For a family of six, I believe it’s $103,000, and so forth. There’s a whole schedule.
What those numbers mean is, for example, if you are a single individual and you earn more than $49,000, at least initially, you would not qualify to file a Chapter 7, and so forth with each of the other numbers. If you’re above those income limits, then a further detailed analysis has to be done to determine whether you can actually file. Those are the initial income limits, but the median income is sort of like filing your income tax return because you have certain deductions and the same thing with the median income. For example, you may have charitable contributions that you file or excessive health insurance expenses or daycare that’s being deducted or paid out by you, which could be used as a deduction on the median income.
You could theoretically, just to make this very simple, as a single individual, you can be at $55,000 hypothetically, even though the limit in Georgia would be $49,000. But let’s say, for example, you have mortgage interest that you’re paying out, that can be used as a deduction to bring you within that $49,000 limit. You could also have, for example, a car payment that you’re paying and we could deduct a portion of that car payment on the means test to be able to bring in under that limit. Or, like I said before, charitable contributions. You could have a mandatory, let’s say for example, 401k that will bring you under the limit.
There’s a variety of different deductions from the means test that could make it so that you would actually qualify for filing a Chapter 7 bankruptcy. So before you just look at the numbers and say, “Oh, I’m above the limit and I don’t qualify for a Chapter 7 bankruptcy,” you really want to speak to an experienced bankruptcy attorney that can look at the different deductions that are available to you to determine whether you in fact do qualify for bankruptcy case, Chapter 7 bankruptcy.
If you have questions of that nature, as to whether your income is too high to be able to file a Chapter 7 bankruptcy, call my office at 770-792-1000, and we’ll do the very best to use all of the deductions to bring you under the threshold income limit so that you can actually file a Chapter 7 bankruptcy and obtain a fresh financial start.