The Bankruptcy Means Test: Are You Eligible for Chapter 7 Bankruptcy?

The bankruptcy “means test” determines whether you are eligible to file Chapter 7 bankruptcy.  The purpose of the means test is to determine who can file for Chapter 7 relief (which requires no payments to creditors as long as assets are all exempt), and who needs to file for Chapter 13 bankruptcy (which requires a small repayment to creditors for 36 to 60 months).  The following table provides the median family income in Pennsylvania for cases filed On or After November 1, 2016: Individual           Family of 2           Family of 3 

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THE NEW BANKRUPTCY LAW

With the new bankruptcy law in effect since October 17, 2005, there is a lot of confusion with regard to the new “means test” requirement. The means test is used by the courts to determine eligibility for Chapter 7 or Chapter 13 bankruptcy. In Chapter 7 cases, the means test determines whether a debtor may obtain Chapter 7 relief. In Chapter 13 cases, the means test determines the amount, if any, that must be paid to unsecured creditors for a plan to be confirmed over the objection of an unsecured creditor or the Chapter 13 trustee. The starting point in 

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