My name is Ron Drescher. I’m an attorney
practicing bankruptcy and commercial litigation in Maryland, Delaware, Pennsylvania and Virginia.
Today I want to answer the question, “What is the means test?’ The means test is a
part of the bankruptcy code that requires debtors who want to file for Chapter 7 to
see if they can qualify for Chapter 7 relief. Chapter 7 is a very desirable way to file
bankruptcy because is most cases it provides the most amount of relief possible because
you discharge all of your debts and in many cases you get to keep all of your property.
So the question is can I file for Chapter 7 bankruptcy, and the means test is the first
step that you take to answer that question. Every state has a median income that’s determined
by the Department of Justice for the United States. Maryland, for example, is one of the
highest states. Other states, like West Virginia, is one of the lowest states. And the median
income is established for an individual, for two people in a family, three people in a
family and four people in a family, and it graduates up from there. And if there is five
in a family, you add approximately another $7,000.00 for each additional member of the
family. If you want to file bankruptcy, the first thing you do is determine what’s my
gross annual income. Then you take that number and you compare it to the median income for
your state. And if your gross annual income is below the median income, then you will
qualify. What we say is there’s no presumption of abuse, and you will be able to file Chapter 7
and get that relief. My name is Ron Drescher. I’m an attorney practicing bankruptcy and
commercial litigation, and if you have a question about whether you can qualify for Chapter
7 bankruptcy, please pick up the phone and call me. I would love to hear from you.