Oklahoma Bankruptcy Means Test

The Oklahoma Bankruptcy Means Test helps you to know if you qualify. Many people who qualify don’t realize it and therefor don’t file.

Several reasons may also explain this failure to file. This includes concerns about one’s ability to qualify for bankruptcy under the means test. The purpose of the means test is to force those that are above a certain income to pay back a portion of their debt. This occurs through a Chapter 13 payment plan. The chapter 13 is for those who don’t pass the means test. For all others who make under the maximum income they get to file the chapter 7.

Many people who fear filing a Chapter 7 bankruptcy misunderstand the term “financial means test”.  Unlike many financial means tests employed by needs based programs of the federal government, it is possible to qualify for a Chapter 7 Bankruptcy discharge even if you earn a above the maximum. The means test uses a two step inquiry.

The first level of analysis involves comparing your monthly annualized income prior to filing bankruptcy to the state median based on the number of people in the debtor’s family.  The median income level for a family of four as of August 2016 $67,300.  If a debtor’s income is below this level, the means test is satisfied. Even if a debtor’s income exceeds the median state income for Oklahoma, a debtor can still qualify for a Chapter 7 Bankruptcy but another level of analysis must occur to determine eligibility. This is called the secondary Oklahoma bankruptcy means test.

Deductible Expenses From Annual Income

The debtor may deduct certain expenses from his or her monthly income to determine disposable income.  This may include:

• Rent or mortgage payments
• Monthly utility expenses
• Court ordered child support
• Mandatory retirement contributions
• Educational expenses for minor children
• Payments on secured financial obligations
• Vehicle ownership and use expenses
• Premiums for healthcare
• Payroll taxes
• Ongoing Charitable contributions

The amount available for some of these deductions comes from IRS allowable amounts.  In other cases the actual amount spent each month may be different. The process of calculating eligibility under this prong of the means test can be complex.  It can be difficult to determine which deductions allow you to deduct the actual amount spent as opposed to amounts permitted by the IRS.  Once these amounts are deducted from your annualized monthly income, you’ll arrive at your net disposable income.

Oklahoma Bankruptcy Means Test and Non-Consumer Income:

If the majority of your income isn’t considered consumer debt the Oklahoma bankruptcy means test may not apply. This means that if your debt comes form a business venture gone bad you may qualify. The calculation looks at all of your debt. If you owe a large sum on a house that may hurt your chances. That’s because that increases the total amount of consumer debt you have. Its this total consumer debt compared to the business debt that’s compared. The business debt must be over half of your total debt.