The Means Test In Illinois Bankruptcies

Most people who file for bankruptcy in Illinois file under Chapter 7. In a Chapter 7 bankruptcy, a court liquidates most of your assets to pay off as much of your debt as possible, and what isn’t paid is discharged or erased. In a Chapter 13 bankruptcy, you create a plan to pay off priority and secured debts and as much unsecured debt as possible over a specific interval of time. Bankruptcy may or may not be right for you, but if you are struggling with debt anywhere in the greater Chicago area, discuss your situation at once with an experienced Chicago bankruptcy lawyer. If you choose to file for bankruptcy in Illinois, you must also complete the “means test” for Chapter 7 and a comparable “test” for Chapter 13.

The means test looks at your average household income in the six months before the month you file for bankruptcy. It’s necessary to determine if your income is above or below the median for a same-size Illinois household. If your household income is below the median, that’s all the means test requires. Below-median debtors are eligible to file for Chapter 7, and if filing under Chapter 13, can choose a three-year term to repay debt. However, if your monthly income exceeds the median income, you’ll have to produce more details about your expenses and secured debt payments to determine if you qualify for Chapter 7. Most persons filing under Chapter 13 must provide these details too. As of April 1, 2015, the median annual income in Illinois is:

– for a single-person household in Illinois, $48,239
– for a household of two, $62,440
– for a household of three, $73,516
– for a household of four, $84,901

Everyone’s situation is different, so you if your debts are starting to pile up, discuss your legal rights, options, and obligations as quickly as possible with an experienced Chicago bankruptcy lawyer.