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What Is the Chapter 7 Means Test?

Rapa Law Office, P.C. Dec. 16, 2020

If you file for personal bankruptcy in Pennsylvania, you must undergo the means test. The court will review your finances to determine if you qualify for Chapter 7 or Chapter 13 bankruptcy.

Learn more about the means test and what it could mean for your bankruptcy case.

Household Income

You can complete the first part of the means test yourself easily. Multiply your average current monthly income by 12 to calculate your annual income. In Pennsylvania, you can qualify for Chapter 7 if you earn less than:

  • $57,213 per year for a single person

  • $70,577 per year for a two-person household

  • $87,217 per year for a three-person household

  • $103,857 per year for a four-person household

Disposable Income

If your household income exceeds the average for Pennsylvania, you can still file for Chapter 7 bankruptcy if you pass the disposable income part of the means test.

For this test, you deduct your average expenses from your income to determine whether you have any disposable income to repay debt. Allowable expenses include up to the local or national average as determined by the IRS for:

  • Rent or mortgage

  • Clothing

  • Food

  • Transportation

  • Car payments

  • Medical bills

  • Utility bills

The amount of money left over after subtracting these available expenses will determine whether you are eligible to file Chapter 7 bankruptcy in Pennsylvania. With Chapter 7, the court will discharge qualifying debts. Otherwise, you can file for a Chapter 13 case in which the court will reorganize your debts for repayment over a five-year period.