Bankruptcy Means Test in Maine
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What is the Bankruptcy Means Test?
Individuals seeking to file for protection from creditors under Chapter 7 of the bankruptcy code must pass, or be exempted from, the Means Test. The Means Test was created by Congress in 2005 and is intended to prevent higher-income individuals from filing bankruptcy under Chapter 7.
Who is exempt from the Means Test?
If your debts are primarily from running a business, if you or your spouse is a disabled veteran, or if you or your spouse were recently or currently active duty military, you may be exempted from the Means Test.
If I’m not exempt, how do I pass the Means Test?
The simplest and most common way for you to pass the Means Test is to be below the median income for your state and family size.
As of October 2021, the median income for a single individual in Maine is $55,354 per year. This amount is updated regularly by the United States Trustee’s office based on census data and changes in the consumer price index. If your family size is 2 or 3, the median income increases to $69,713 and $83,145 respectively.
For purposes of the Means Test, your annual income is considered to be twice the amount you earned in the six months prior to the month that you filed for bankruptcy. So if you file in the month of July, your annual income is considered to be twice the amount that you earned from January 1st to June 30th. Therefore, the timing of your bankruptcy filing can be an important issue for individuals with income that is variable - such as those who engage in seasonal work.
If your annual income is above the median for your family size in Maine, you may still be able to qualify for filing under Chapter 7. You are allowed to reduce your income for purposes of the Means Test by deducting from your annual income necessary expenses, such as taxes deducted from your wages, health insurance costs, transportation costs, and many other categories of necessary expenses.
If even after deducting for your necessary expenses, you are above median income, you may still qualify for Chapter 7 if you are facing an unusual hardship, such as you are no longer able to work or are facing other difficult circumstances.
What if I don’t pass the bankruptcy means test?
If you are unable to pass the Chapter 7 Means Test, then you may have to look into other forms of relief such as filing bankruptcy under Chapter 13 or working with your creditors to settle your debt for less than the amount owed. Contact us to explore your options.
How much is a Chapter 7 bankruptcy consultation with a lawyer?
The initial consultation with Shafto Law is free of charge.
Getting Help
As you seek to resolve your debt in Maine, Shafto Law can help you navigate the often complicated decisions and legality of that process. When you choose to work with us, we are here through the entirety of your case. Your legal affairs will be handled with expert care and your matters will be resolved as favorably and efficiently as possible.
Resolve debt with Shafto Law today. You can call us directly at 207-619-4006 or communicate with us via our Contact page. Your debt resolution needs are personal. Shafto Law can help you sort through the process.
This article is not intended to be a substitute for professional legal advice and cannot be taken as such. Nor does this article establish any type of attorney-client relationship with Shafto Law. If you’d like to consult with us for advice concerning your specific needs, please contact us to set up an appointment. We are happy to help.
“Hiring a lawyer for representation leading up to and during the filing process is advisable. You may contact Shafto Law at any time for a free consultation.”
“In filing for Chapter 13 in Maine, nothing will be taken from you. You may choose to sell your property(ies) as a means to fund your repayment plan. However, in Chapter 13 bankruptcy you’re able to keep your assets.”
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Bankruptcy Resources
Debt relief under Chapter 7 offers a lot of flexibility. The process is typically fast, simple, and complete. In many cases, you will be completely debt-free in about 90 days. Read more.
Filing for Chapter 13 allows you to propose a plan that could help you repay all or part of your debt over time. It’s ideal for debtors who have a regular income... Read more.
When seeking relief from debt, bankruptcy is not your only option. Rather than file for bankruptcy, let our firm negotiate directly with your creditors. This process may result in a better solution. Read more.
From our law office in Portland, we serve clients throughout southern Maine and the Casco Bay area.