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The Bankruptcy Means Test in Virginia

To file for Chapter 7 bankruptcy, you must pass the means test. This test is used to compare your income in the six-month period before filing to the average income of a comparable household in Virginia. If your income is below the median state income for a comparable household, which was $56,436 in 2017, according to the U.S. Census, you automatically are exempt from the test and can proceed to file for Chapter 7 protection.

If your income is higher than the median for the size of your household in Virginia, you must complete the means test calculation.

You can calculate the average income for your household by averaging your monthly income (both yours and that of your spouse, if applicable) over the last six calendar months. If you have seen a downward trend in your income over that time, it might make sense for you to wait another month or two for your income to fall below the median level for the state.

Bankruptcy Chapter 7 Virginia

Once you know your average monthly income, multiply it by 12 to determine your annual income. You can then compare it to the median income for the state of Virginia based on a household of your size.

If your income is above the median income for your household, you must continue by calculating your income and expense information. Consider all sources of income, including business income, rental income, pensions, retirement plans, interests and dividends, unemployment income, government benefits and any expenses paid by others on your behalf. Expenses are based on state, local and national standards and averages provided by the Internal Revenue Service and the U.S. Census Bureau. You may include some expenses as obligations, including any for health and welfare, plus financial obligations you’re legally obligated to pay (such as taxes or certain loans).

Then, subtract your allowed expenses from your income to determine the amount of available income you have to pay your creditors. If the total over the course of the next 60 months falls below $7,475, you can file for Chapter 7 bankruptcy. If it’s more than $12,475, you’ll fail the means test and not be eligible for Chapter 7. If it’s between the two figures, there are additional calculations that will apply.

For more information on your eligibility to file for Chapter 7 bankruptcy, speak with an experienced bankruptcy lawyer at Miller Law Group, P.C. by contacting us online or calling our team at 434-202-5293.