The Bankruptcy Means Test: How It Applies in Wisconsin

The Bankruptcy Means Test is a critical component of filing for bankruptcy in Wisconsin, as it determines eligibility for Chapter 7 bankruptcy. This test evaluates a debtor's income against the median income in Wisconsin and assesses their disposable income to determine if they can repay their debts.

The first step in the Bankruptcy Means Test is to calculate your current monthly income (CMI). This includes all income sources over the past six months, such as wages, bonuses, rental income, and even unemployment benefits. In Wisconsin, the threshold for median income varies by family size. Therefore, it’s essential to check the latest statistics from the U.S. Department of Justice’s website to understand the income limits applicable to your household size.

If your current monthly income is below the state median, you automatically qualify for Chapter 7 bankruptcy. However, if your income exceeds the median, you'll have to complete the second part of the means test, which involves evaluating your expenses and calculating your disposable income. The test subtracts allowed expenses, which are based on IRS standards, from your current monthly income.

Allowed expenses can include necessities such as housing, utilities, food, clothing, and health care. If the remaining disposable income is less than a specific threshold, you may still qualify for Chapter 7 bankruptcy. However, if it’s above that limit, you could be required to file for Chapter 13 bankruptcy instead, which involves a repayment plan for outstanding debts.

Understanding how to navigate the Bankruptcy Means Test can be complex. For residents of Wisconsin, seeking the guidance of an experienced bankruptcy attorney is often beneficial. An attorney can help ensure all calculations are accurate and that you are maximizing your chances of qualifying for Chapter 7 bankruptcy.

Additionally, it’s important to keep in mind that bankruptcy laws can change, and the specifics of your financial situation can significantly impact the outcome of your means test. Thus, staying informed and consulting with legal professionals will help you make the best decisions for your circumstances.

In conclusion, the Bankruptcy Means Test is a vital step for those considering bankruptcy in Wisconsin. By understanding the requirements and working with qualified professionals, individuals can navigate this process more effectively, allowing them to pursue a fresh financial start.