What is a means test?

A means test is a procedure used to determine whether or not a person filing for bankruptcy in Washington State is eligible for Chapter 7 bankruptcy. The means test is used to determine if the person has enough disposable income to be able to repay some of their debts. The means test looks at the individual’s total income over the past six months and divides it into two categories, secured and unsecured debts. Secured debts are those that are backed by collateral, such as a car or house loan. Unsecured debts are debts that are not backed by collateral, such as credit card debt and medical bills. The means test looks at the total amount of your income minus the allowed living expenses. These expenses include housing costs, transportation costs, food and clothing, medical expenses and other necessary expenses. The result of the means test is either a positive number or a negative number. If the test results in a positive number, then the filer is considered able to repay some of their debts and is not eligible for Chapter 7 bankruptcy. If the test results in a negative number, then the filer is considered to not have the ability to repay any of their debts and is eligible for Chapter 7 bankruptcy.

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What is a means test?

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