If you’re considering filing for personal bankruptcy to regain control of your financial situation, you have two options from which to choose — Chapter 7 or Chapter 13. While both are viable solutions for achieving debt relief, many people prefer Chapter 7 bankruptcy because it provides the opportunity to eliminate unsecured debt. However, there are strict guidelines on who is eligible to file Chapter 7. One of the requirements is that you must pass a means test proving you don’t have the income available to pay your financial obligations. Below is an overview of how the means test works for Wisconsin petitioners.

What to Know About the Chapter 7 Bankruptcy Means Test

Monthly Income 

The first step in figuring out if you meet the criteria to file Chapter 7 bankruptcy is to compare your current monthly income to the median income for a household of the same size in Wisconsin. If it’s less, you automatically pass. For means test purposes, your income is considered to be whatever you earned in the six months before filing bankruptcy. This should include income from all sources, such as wages from your job, unemployment, gambling winnings, workers’ compensation, retirement account distributions, and personal injury settlements.

Means Test Calculator 

If your income exceeds the median, you will need to complete the full means test to see if you’re eligible for Chapter 7 bankruptcy. This involves determining if you have enough disposable income after paying monthly living expenses to pay back at least a portion of what you owe your creditors. The expenses you’re allowed to deduct include housing costs, car loans, utilities, taxes, insurance, and childcare. If your disposable income adds up to more than the specified amount, you won’t be able to file under Chapter 7, but you may consider Chapter 13 as an alternative.

The means test plays a crucial role in determining whether or not you qualify to file Chapter 7 bankruptcy, so ensure your calculations are accurate. The attorneys at Bender & Bender can help certify that your income, living expenses, and debts are properly measured to give you the best chance of passing. Offering more than 35 years of experience, they have guided numerous Wisconsin Rapids, WI, residents through the bankruptcy process successfully. To arrange a consultation and begin your journey to financial stability, call (715) 423-4400.