Every year, the cost of living, retail prices, and many other aspects of our economy and lives change slightly. The same is true for the bankruptcy requirements and the bankruptcy code because the way bankruptcy works from case to case reflects household debts and household incomes. If you are considering filing for bankruptcy, you may qualify for Chapter 7 if you pass the Means Test. Chapter 7 bankruptcy is the most commonly filed individual consumer case, and it provides the most direct relief by completely discharging most debts in a very short period of time. Behm Law Group, Ltd. can help you determine if you’ll qualify for Chapter 7 or if you would benefit more from a Chapter 13 reorganization bankruptcy case. Our attorneys provide legal guidance and protection throughout your case, helping you find long-lasting debt relief in Worthington, MN and the local region.
Debt Relief
The Means Test is a bankruptcy code mathematical formula that determines your debt-to-income ratio. If your debt-to-income ratio is lower than the state average or median for a similarly-sized household, you will qualify for debt relief through Chapter 7 bankruptcy. Because the Means Test deals with debt and income levels, the numbers used for various household sizes change over time.
Since May of 2021, the Means Test numbers for household sizes in Minnesota are as follows:
Size of Household Monthly Income Annual Income
1 $5,214.50 $62,574.00
2 $6,873.58 $82,483.00
3 $8472.42 $101,669.00
4 $10,009.17 $120,110.00
5 $10,759.17 $129,110.00
6 $11,509.17 $138,110.00
7 $12,259.17 $147,110.00
8 $13,009.17 $156,110.00
9 $13,759.17 $165,110.00
10 $14,509.17 $174,110.00
These income amounts are calculated as gross income, so the actual conclusion of the Means Test doesn’t come until after your debts and other expenses are subtracted from these gross income amounts. If you have children, own a home and a car, are married, or have other common life expenses that are shared among many filers, it’s likely you will be more able to qualify and file for Chapter 7 bankruptcy even if your income is on the higher end.
Means Test
Due to lower costs of living and fewer expenses, single filers or households of just two people typically have a harder time passing the Means Test. If you fail the Means Test, you’ll still be able to file a Chapter 13 case. Chapter 13 reorganizes your debts into a manageable three (3) to five (5) year repayment plan that is tailored to your monthly income and your monthly reasonable and necessary living expenses. Your unsecured creditors are only partially paid – usually anywhere from 10% to 30% (depending on the level of your monthly household income) — and your secured debts are usually repaid under more favorable terms than you had before your bankruptcy case was filed.
To learn more about the Means Test and using individual consumer bankruptcy for permanent debt relief in Worthington, MN, contact Behm Law Group, Ltd. today at (507) 387-7200 or stephen@mankatobankruptcy.com.
