Can you pass the Illinois means test for Chapter 7 bankruptcy?

 Posted on March 20, 2020 in Bankruptcy

Chapter 7 bankruptcy is the most aggressive and fastest kind of bankruptcy available to individuals and married couples. It also gets called liquidation bankruptcy, as the courts can order the liquidation of assets as a means of repaying creditors during Chapter 7 proceedings.

Typically, those who successfully file for Chapter 7 bankruptcy can receive a discharge after the courts review their request, all without any requirement to repay their creditors. As a result, there are very strict limitations on who can file for Chapter 7 protection. In order to prevent abuse of this form of bankruptcy, it is necessary for individuals to pass a state-based means test prior to filing.

How does Illinois' means test work?

The basic premise of a means test involves comparing the individual's adjusted income to the state median income for their household size. The individual filing can make certain adjustments or reductions to their overall income for certain expenses, meaning that those who are quite close to or just over the income limit may still be able to pass the means test.

For a single individual with no dependents in Indiana filing on or after April 1st, 2020, their adjusted household income must be at or below $48,834 to qualify for Chapter 7 proceedings. For households with two members, that income limit increases to $62,931. Households with three family members can have an income of up to $73,537, while households with four members have an upper limit of $87,636.

Passing the means test is the first step in determining your eligibility for Chapter 7 bankruptcy and seeking the discharge you need for a fresh start.