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What is the Chapter 7 bankruptcy means test?

If you are seeking Chapter 7 bankruptcy protection in Oregon, you must meet certain qualifications. One of these eligibility requirements is the means test. In order to ensure you choose the right debt relief option for your situation, it is important that you understand when the means test is applicable and what it entails.

When filing for Chapter 7 bankruptcy, you must provide information regarding your gross monthly income for the six months leading up to your filing. If your average gross monthly income is over the state median for a family of your size, then you will have to complete the means test calculation. According to the U.S. Department of Justice, the median income is $47,864 for a one-earner household, $59,274 for a two-person household, $66,265 for a three-person household and $76,330 for a four-person household in Oregon.

The means test calculation includes income such as the following: wages, commissions, interest, royalties, dividends, real and rental property income, spousal or child support, unemployment compensation, workers’ compensation benefits, pension, retirement income and state disability insurance. Income including Social Security Disability and retirement benefits, Temporary Assistance for Needy Families and Supplemental Security Income is excluded from the calculation of your gross monthly income. The means test calculation then deducts allowed expenses from your income.

After deducting your allowed expenses from your gross income, you may not qualify for Chapter 7 bankruptcy. In some cases, your filing may be converted to a Chapter 13 bankruptcy. However, you may choose to pursue a Chapter 7 case, and may be allowed this type of protection if you are able to establish the existence of certain special circumstances. This may include a serious medical condition, high rent costs or recent unemployment.

This post has provided an overview of the Chapter 7 bankruptcy means test. However, you should keep in mind that the circumstances of each case are unique. Therefore, this post should be taken only as general information and not as legal advice.

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