Beat The Means Test

Bankruptcy laws say you have to do a Means Test. You are to list the gross income in family for the past six (6) months. The total is compared to the Illinois State Standards.

If your gross family income is above a certain amount they want you to file a Chapter 13 instead of a Chapter 7.

Most people have income below the Means Test.

Everyone has to take the Means Test. For most it is only a simple exercise but for some it presents a challenge.

Even if your gross income is above the income listed below there are many ways to defeat the Means Test.

Experienced and skilled lawyers understand the test. Our law firm has filed Chapter 7 for individuals whose income is above the threshold. One couple has income of $130,000. One single client has income of $85,000. Both filed Chapter 7.

What if you can’t file a Chapter 7 because of the gross income in the family? There are ways of keeping the Chapter 13 dividend as low as possible.

Many of our clients who have to file Chapter 13 pay a small dividend to unsecured creditors. Like 10% or so.

The following is the median income for Illinois residents as of May 1, 2020:

# In Household Monthly Income 6 Month Total Annual Income
1 4,573 27,439 54,877
2 6,049 36,297 72,593
3 6,980 41,880 83,759
4 8,590 51,537 103,074
Add for each additional person 750 4,500 9,000


The Means Test does not include Social Security benefits.

The number of persons in the household is generally the number on your tax return. But, you can include the following:

  1. Children away at college;
  2. Relatives living with you like grandchildren and nieces and nephews;
  3. significant others include their children;
  4. Anyone living with you who are dependent on you.

You must include all the income for the household, but then also deduct the bills for the whole household.

If your income is above the Means Test there are a slew of deductions that may allow you to file Chapter 7. Or, file a low dividend Chapter 13. To name a few:

  • IRS allowances for housing, food, clothing and transportation.
  • Federal and state taxes; social security and Medicare deductions.
  • Court ordered deductions that will continue such as Child support.
  • Child care and deductible tuition and school expenses of a child 18 years and under.
  • Mandatory retirement plans, union dues and uniforms.
  • Secured debt payments like Mortgage payments and car loans. Also, real estate taxes and homeowners insurance if you have a non-escrowed mortgage.
  • Health Care but only out-of-pocket; Health Insurance premiums for you and your dependents. Also, term life insurance, and disability insurance.
  • Charitable Contributions such as contributions to your church up to 15%.
  • Continued contributions to elderly, chronically ill or disabled family members. And they don’t have live with you.
  • Taxes that can’t be discharged including interest on them.
  • If only one spouse files a case, the Means Test allows deductions for the non-filing spouse’s expenses.

Some other points to consider:

  • Separated spouses can but file together. There will be 2 Means Test: one for each spouse.
  • Overtime premium and periodic bonuses. It is income. But, if overtime premium and/or bonuses have stopped we can work around it. If a bonus is once a year it can amortize. Same if overtime is for one part of the year.

For most people the above is a lot of legalese. To a skilled and experienced lawyer, it lays the foundation to beat the Means Test. We help clients defeat the Means Test on a regular basis.

In Chapter 13 the Means Test form is a bit different and it dictates how big your payments will be. If your income exceeds the National Standards the plan must run 5 years. But, still many of our clients pay a small dividend to unsecured creditors.

Disclaimer: Blogs on legal matters are for information purposes only and is not to be construed as legal advice.

For more information on The Means Test call today.

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