Chapter 7 Bankruptcy Plano TX: How The ‘Means Test’ Affects Your Case

Chapter 7 Bankruptcy Plano TXHave you ever heard someone say, ‘I’ll just declare bankruptcy,’ when they’re confronted with bill collectors and a mountain of their own debt?  That statement has become the mantra of the American consumer in the last 50 years – and it implies that it’s just too easy to spend more money than you have, declare bankruptcy and start over again.  Yes, declaring Chapter 7 bankruptcy in Plano TX is a way to get a fresh, financial start when your debts have spiraled out of control; but it’s not for everyone.

In order to qualify for Chapter 7 bankruptcy in Plano TX, which is the most common type of bankruptcy declared by individuals, you have to pass what is called a ‘means test.’ As part of the Bankruptcy Abuse and Consumer Protection Act of 2005, the means test must determine that you have little to no income in order to qualify automatically for Chapter 7 bankruptcy.  In fact, the means test compares your average monthly income for the six months before you file for bankruptcy to the median income of a similar household in Texas.  If your income is below the median, you can file for Chapter 7 bankruptcy.

So, what if your income is above the median?  You still have options because the means test goes beyond just comparing your income to others. The rest of the means test is simply a comparison of your income to your expenses.  Keep in mind that only certain expenses are allowed and only up to a specified allowable amount.  If, after all allowed expenses are deducted you have little or no income, you can qualify for Chapter 7.  If your expenses are less than your income, you won’t be able to declare Chapter 7 bankruptcy.

Although the means test sounds simple, it’s actually extremely complicated because the values you are allowed to deduct can only be ascertained through a number of complicated formulas.  This is where an experienced bankruptcy attorney comes in.  A bankruptcy attorney can also tell you what your other options are if you don’t qualify for Chapter 7 bankruptcy in Plano,TX.

If your debts are mounting and you want more information about Chapter 7 bankruptcy in Plano TX, call us at Collins & Arnove at 972-516-4255.  We are bankruptcy attorneys and counselors and we can help you to get a fresh start on your financial future.  To learn more about us and Chapter 7 bankruptcy, visit

Collins & Arnove | Chapter 7 Bankruptcy Plano TX | 972-516-4255