What If I “Fail” The Means Test?

What If I "Fail" The Means Test?

The Means Test was created to target abuse of the bankruptcy process. In reality, it was formulated to make it more difficult for Americans to file for bankruptcy. However, the experienced attorneys at the Morrison Law Group are adept at making the lives of bankruptcy debtors easier by handling all the important and complicated aspects of a bankruptcy case, including the Means Test. The attorneys at the Morrison Law Group are especially helpful to those who may not qualify after first completing the Means Test. What if someone fails the Means Test?

The first part of the Means Test examines a potential filer’s gross income and measures whether current monthly income is less than the median income for a family of the filer’s size in Utah. If so, the individual immediately qualifies to file a Chapter 7 bankruptcy case and obtain a fresh start. If the current monthly income is higher than the median income, an individual may still qualify by completing the second part of the Means Test.

The second part of the bankruptcy Means Test in Utah reviews a potential filer’s income but also considers monthly expenses to determine overall disposable income. If after deducting monthly expenses from income there is little or no disposable income remaining, an individual may still qualify to file a Chapter 7 case. Otherwise, a Chapter 13 case must be filed.

Anyone who “fails” the Means Test should first check to see if they miscalculated any expense amount of mathematical operation. One incorrect number may throw off the entire calculation. After review, if the numbers as entered into the calculations are correct, it may be necessary to review all expenses to make sure all were included that could be included.

It is easy to miss an expense if it is an item or service that is only purchased a few times annually like car parts. For expenses that are only incurred a few times a year, divide the amount spent by 12 to calculate the monthly amount. People often fail to realize how much they spend on necessities like food or gas. Keeping track of expenses accurately may be all that is necessary to pass the Means Test.

The most common errors that may result in failing the Means Test include:

  • overestimating income
  • underestimating or missing allowable deductions, and
  • using the wrong household size.

If still unable to pass the Means Test after re-reviewing all expenses, it may be necessary to wait to file a bankruptcy case, if this is possible under the circumstances. If income is subject to change in the near future, it may be possible to qualify at this later time. The Morrison Law Group can still help a prospective filer prepare for bankruptcy while awaiting the proper time to file. Otherwise, it may be necessary to consider filing a Chapter 13 bankruptcy case. The Morrison Law Group’s seasoned attorneys are fully qualified to help anyone consider their Chapter 13 bankruptcy options.

The Morrison Law Group strives for complete client satisfaction with the services that we provide throughout a client’s bankruptcy case, as well as the ongoing services that we provide post-bankruptcy. Not all Utah Bankruptcy attorneys can make this statement, but the Morrison Law Group is not like other Utah bankruptcy law firms. We can help if you are facing possible foreclosure or just a few months behind on your mortgage payments. Call 801.456.9933 today to schedule a FREE consultation. We have locations in Ogden, Logan, Sandy, and St. George to serve the residents of the counties of Weber, Cache, Salt Lake, Utah, Morgan, Davis, Washington, and surrounding areas.

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Theron Morrison

Utah’s top bankruptcy and consumer protection attorney.