St. Louis Chapter 7 Means Test


In 2005, Congress passed the Bankruptcy Abuse Prevention and Consumer Protection Act.  The goal of this Act was to greatly limit the extent to which someone could file a St. Louis Chapter 7 bankruptcy.  In order to accomplish this, the Congress devised a ‘means test’ to determine whether or not you qualify for such protection.  Getting someone to ‘pass the means test’ has become the heart and soul in the practice of St. Louis bankruptcy law.  In fact, experienced St. Louis bankruptcy attorneys spend most of their time dealing with this test, and all the issues that arise therewith.

In a nutshell, qualifying for a Missouri Chapter 7 depends upon the answer to two main questions:  1) what is your household size;  and 2) what is your household income.  According to the government, the average (or median) income for a household of one is: $38,895 (as of 1/1/2012).  If you are below this figure (and you have not filed a Chapter 7 within the last eight years), then you qualify for protection under Chapter 7 of the Bankruptcy Code.  The average (or median) income for a household of three is: $58,355 (as of 1/1/2012).  If you are a household of three and you fall below this figure, then you qualify for a Chapter 7.

So how does the government determine is you do or do not fall above or below these figures?  It looks at a period of time called the ‘Current Monthly Income’.  This is the six months prior to filing for bankruptcy.  All sources of income received during this period must be disclosed (although not all sources will be taken into account, like Social Security).  The income amounts are tabulated, and then annualized to give a total for your household income.  Once this final figure is reached, it is then possible to compare your income level against that of the average income for your particular sized household.

Of course, it is possible to still qualify for a Chapter 7 even if you are above the median income level.  The government allows certain deductions and exemptions to be taken, which reduce the amount of disposable income you have on paper.  If you find yourself below the median income level after the exemptions have been applied, you then qualify.

But knowing which exemptions are available, and which are not, is a very precise set of skills.  Indeed, there are seasoned bankruptcy attorneys who have been practicing for years who do not fully understand this area of the law.  The affordable St. Louis bankruptcy lawyers at Brinkman & Alter, LLC have been providing expert bankruptcy legal services for a great many years.  Our goal is to make sure you are put in the best position possible, so that you can receive the fresh start / clean slate that you deserve.  

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