What is a means test?

A means test is a tool used in Chapter 7 Bankruptcy Law in Virginia, and it is used to determine whether a person is eligible for Chapter 7 bankruptcy. The means test is used to determine an individual’s ability to pay off their debts. The means test starts with an individual’s income for the 6 months prior to filing. This income is added up and averaged out. Then, the individual’s expenses are deducted. If the remaining amount is less than the Virginia median income, the individual will qualify for Chapter 7 bankruptcy. If the remaining amount is more than the Virginia median income, then the individual will have to take a deeper look into his or her finances. This includes taking a look at secured and unsecured debt, the amount of income and expenses for the last 6 months, and other factors. If the individual and/or their dependents have enough income and expenses that could cover at least some portion of their secured and unsecured debts, then Chapter 7 bankruptcy may not be an option. The purpose of the means test is to ensure that taxpayers who can reasonably afford to pay back their debt do not use Chapter 7 bankruptcy to escape their debt. It also helps to protect creditors from being taken advantage of by debtors who are trying to avoid paying back their debts.

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What is a means test?

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