If you have begun thinking about filing Chapter 7 bankruptcy, you need to know about the means test you must pass in order to qualify. FindLaw explains that per the 2005 Bankruptcy Protection Act, each state first determines its residents’ median annual income and then determines whether or not your income falls below this level. If so, you qualify,
In Maryland, the median annual income for one person is $69,529; for a couple, it is $88,815.
Median income inclusions
To determine your annual income, you must first determine your income for the last six months and then multiply by two. Your median income calculation must include such things as the following:
- Employment income, including salary or wages, overtime amounts, bonuses, tips, commissions, etc.
- Self-employment income, including the gross income you receive from your profession, business or farm
- Interest, dividend and royalty payment income
- Rental property or real estate investment income
- Pension or retirement plan income
- Regular spousal or child support payment income
In addition, you must include any unemployment or workers’ compensation payments you receive. You likewise must include any state disability insurance payments you receive.
Means test exclusions
You need not “take” the means test in order to qualify for Chapter 7 bankruptcy under the following circumstances:
- You are a disabled veteran.
- Your disability rating is at least 30%.
- You acquired at least half of your debt while on active duty or engaged in homeland defense activities.
Once you qualify for Chapter 7, either as a disabled veteran or via the Maryland means test, you can expect the bankruptcy court to discharge virtually all of your consumer debts, including your credit card debts, within four to six months.