Also known as liquidation bankruptcy, chapter 7 bankruptcy results in an immediate discharge of applicable debts. As such, those who wish to file this type of bankruptcy may try to demonstrate that they cannot afford to reorganize their debt by filing chapter 13 bankruptcy. To attempt to prove they cannot afford to repay debt, an individual can pass a special means test. Since the requirements for this test vary by state, it may be prudent to consult with a local bankruptcy lawyer before attempting to file a petition. Here's some general information about Ohio’s test for potential filers. 

How Does the Means Test Evaluate Financial Health?

The means test considers your income and expenses to determine if you have enough disposable income left at the end of every month to pay back creditors. If your average household income is less than the state’s median for a household of your size, you may have passed the means test. If you earn more than the median, on the other hand, you can add all sources of income and then subtract all allowed expenses from the total.

For this region of Ohio, if the resulting figure works out to be more than $12,475 annually, you may not be entitled to chapter 7 bankruptcy. It may be presumed you have funds available to repay creditors. If the resulting amount is less than $7,475, on the other hand, you may pass the means test. And if it’s between these two figures, additional calculations will be necessary to determine if you qualify for chapter 7. 

Does Everyone Have to Take the Means Test?

Because there are several exceptions to the means test, it may be wise to consult with a bankruptcy lawyer to confirm your status before filing for chapter 7 or chapter 13. For example, if most of your debts are not consumer debts, you may be exempt from taking the means test. Disabled veterans may also be exempt if they incurred their debt while on active duty. 

If you’re in over your head financially, turn to a respected bankruptcy lawyer at Swartz Law Office to determine how you should proceed. Based in Batavia, OH, this firm is proud to represent clients throughout Clermont County. They’ve helped thousands of individuals navigate complex legal proceedings, from family law disputes to real estate transactions. Whether you need mortgage help or counsel regarding child custody, you can count on them. To talk to a bankruptcy lawyer about your situation. Call (513) 732-0900 or reach out on their website.