The Bankruptcy Means Test and Eligibility in Ohio

The Bankruptcy Means Test is a crucial part of the bankruptcy process in Ohio, determining eligibility for filing under Chapter 7 or Chapter 13. Understanding this test can significantly impact individuals facing financial hardship.

In Ohio, the Means Test was established to prevent high-income earners from filing for Chapter 7 bankruptcy and thereby receiving a discharge of debt without repaying their creditors. This test evaluates your income compared to the median income for a household of your size in Ohio.

To begin, you first need to calculate your average monthly income over the last six months. This encompasses all forms of income, including wages, bonuses, rental income, and even unemployment benefits. Once you have your average monthly income, multiply it by twelve to find your annual income.

Next, you compare your annual income to the median income for Ohio. As of 2023, the median income for a household of various sizes can be found on the official U.S. Trustee Program website or other reliable resources. If your income falls below the median, you are typically eligible to file for Chapter 7 bankruptcy.

If your income exceeds the median, the Means Test does not automatically disqualify you from Chapter 7. Instead, the test involves a more detailed calculation of your expenses. You'll need to complete Form B 122A-2, which lists your monthly expenses and deductions allowed under the IRS guidelines.

The allowable expenses can include costs related to housing, healthcare, transportation, taxes, and more. After deducting these expenses from your average monthly income, if you have little to no disposable income left, you may still qualify for Chapter 7 bankruptcy.

However, if your disposable income is significant, you may not be eligible for Chapter 7 and might have to consider Chapter 13 bankruptcy, where you can repay your debts over a set period. This option can be beneficial for those who want to keep their assets, such as a home or car.

Filing for bankruptcy can be a complicated process. It’s crucial to consult with a qualified bankruptcy attorney in Ohio who can guide you through the Means Test. They can provide personalized advice based on your financial situation and help you understand all your options.

In summary, the Bankruptcy Means Test in Ohio assesses income and expenses to determine eligibility for bankruptcy filings. Understanding how this test works is essential for anyone considering bankruptcy as a solution to financial difficulties. Staying informed can lead to more informed decisions and potentially a smoother path toward financial recovery.