Are There Exceptions to the Chapter 7 Bankruptcy Means Test?

Signature on bankruptcy agreementNearly everyone that wants to file for Chapter 7 bankruptcy must past what is called a “means test,” which gauges an individual’s income and expenses to determine if he or she is eligible to file for bankruptcy. If a debtor’s income is equal to or above the state’s median income, then a bankruptcy means test is usually required, but there are a few exceptions. A debtor does not have to take a means test regardless of how high their income is if they fall under one of the following categories:

  • Disabled Veteran – Disabled vets who incurred most of their debts while on active duty either foreign or domestic may be exempt from the means test. Those who qualify as exempt typically have to prove a disability rating of 30 percent or more and were discharged from active duty due to a disability from injury sustained while in service.
  • Military Reserve and National Guard – Members of the military reserve and National Guard may also be exempt from the means test for the time they are on active duty and 540 days after that. The period of active duty must be at least 90 days. After the 540 day window is up, you will be required to take the bankruptcy means test.
  • Non-Consumer Debts – An excess of non-consumer debts, such as business debts, most taxes, student loans, real estate investments, and medical bills, may exempt you from the means test. It is important to note that courts sometimes vary on what they consider to be non-consumer debts, so it is especially important to discuss your debts with a bankruptcy attorney who can help you to determine how a court may categorize your debts.

Whatever your situation, a bankruptcy lawyer can help you through the bankruptcy process from start to finish to ensure that everything goes smoothly and you are able to get the fresh start you deserve.

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