The Bankruptcy Means Test Explained for Connecticut Residents

For many Connecticut residents facing financial difficulties, the bankruptcy process can feel overwhelming. One critical aspect of filing for bankruptcy is the Bankruptcy Means Test. Understanding the Means Test can significantly impact your ability to qualify for Chapter 7 or Chapter 13 bankruptcy.

The Bankruptcy Means Test is designed to determine whether your income is low enough to qualify for Chapter 7 bankruptcy. Chapter 7 bankruptcy allows individuals to discharge most of their unsecured debts, offering a fresh financial start. However, not everyone is eligible. The Means Test compares your income to the median income for a household of your size in Connecticut.

In Connecticut, to pass the Means Test, your monthly income must be below the state’s median. If your income exceeds the median, you may still qualify by demonstrating that you have specific allowable expenses that reduce your disposable income. The court will assess your gross income over the six-month period preceding your filing. This total is adjusted for specific deductions related to your living expenses and taxes.

If your income is above the median, the next step is to perform a calculation based on your disposable income. This involves subtracting your allowable expenses from your monthly income. If your disposable income is below a certain threshold, you may still be eligible for Chapter 7. Otherwise, you may have to consider filing for Chapter 13 bankruptcy, which involves a repayment plan to pay back some or all of your debts over three to five years.

Understanding your financial situation is crucial when undergoing the Means Test. It is advisable to keep detailed records of your income, expenses, and any financial documents that can support your position. Consulting with a qualified bankruptcy attorney can also provide invaluable guidance throughout the process.

In summary, the Bankruptcy Means Test is an essential measure for Connecticut residents considering bankruptcy. It evaluates your income against state medians and analyzes your financial capabilities to determine eligibility for Chapter 7. If you're struggling with debt and the possibility of bankruptcy is on your horizon, gaining a thorough understanding of the Means Test can be your first step towards financial relief.