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What is the means test?

Under federal law, debtors pursuing Chapter 7 bankruptcy protection must first pass what is known as the means test in order to qualify for this type of bankruptcy. The means test is a process by which the debtor’s income is assessed in order to determine whether they are truly incapable of repaying their debts. Those who have incomes below the median for similarly-sized households in their state are not subjected to the means test. However, if an individual’s household income is above the median, a projection of monthly disposable income is made in order to determine eligibility.

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