The Kentucky Chapter 7 Means Test Calculation is a tool used to determine a person's eligibility for filing for Chapter 7 Bankruptcy. The means test considers a debtor's income and expenses to determine if they have the financial capability to pay back a portion of their debt. The test is based on the median income of the state of Kentucky and the debtor's ability to pay back a portion of their debt. There are two types of Kentucky Chapter 7 Means Test Calculation: 1. The Chapter 7 Means Test Calculation — This test compares the debtor's current monthly income to the median income for Kentucky households of the same size. If the debtor’s income is below the median, the debtor is eligible to file for Chapter 7 bankruptcy. 2. The Chapter 7 Presumption of Abuse Test — This test is used to determine if the debtor has sufficient disposable income to pay back a portion of their debt. If the debtor’s disposable income is above the median, then the debtor may not be eligible to file for Chapter 7 bankruptcy.
Kentucky Chapter 7 Means Test Calculation
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How to fill out Kentucky Chapter 7 Means Test Calculation?
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FAQ
You can earn a high income and still pass the means test if you have substantial expenses like a hefty mortgage, multiple car payments, taxes, childcare, health care, or care of an elderly or disabled person.
The means test is calculated by comparing the debtor's average income for the past six months (current monthly income), annualized, to the median income for households of the same size in the debtor's state of residence.
The Means Test This test uses a complex formula that takes the gross income for the 6 month period above, and then subtracts out only certain allowed IRS-budgeted expenses items, and ongoing secured debt obligations.
To determine your Chapter 7 bankruptcy income limit, add the last six months of your gross income ? this is what you earned before taxes and other deductions were taken out.
It takes into account your income, expenses and family size to determine whether you have enough disposable income to repay your debts. Although it was designed to restrict the number of debtors who can get their debts forgiven through a Chapter 7 bankruptcy, most people who take the means test pass it easily.
That means both taxed and untaxed income, including wages, salary, tips, bonuses, interest, dividends, royalties, retirement income, unemployment and workers' compensation, and others.
Expenses That Will Help You Pass the Chapter 7 Means Test House, car, and other secured debt payments.Overdue taxes.Court-ordered payments and arrearages.Child care.Involuntary deductions.Health, disability, or term life insurance.Other healthcare expenses.Education for employment or a disabled child.
Total average monthly payment for all mortgages and other debts secured by your home. To calculate the total average monthly payment, add all amounts that are contractually due to each secured creditor in the 60 months after you file for bankruptcy. Then divide by 60.