Do you “qualify” to file Chapter 7? Probably, but to be certain we will have to look at the Means Test under the New Bankruptcy Law if your income has reached a certain threshold level (“Median Income”). The Means Test is an artificial formula established under the 2005 changes to the Bankruptcy law which uses your actual income and then compares it to a combination of your actual living expenses and certain “Hypothetical Living Expenses.”

The purpose of the comparison is to determine if you have enough net income such that you the law deems you capable of paying back some reasonable percentage of your general debts (your unsecured general creditors). If you “fail” this Means Test, your Chapter 7 case is presumed to be an “abuse” and it will be dismissed unless you choose to convert your case to a Chapter 13.