Qualifying for bankruptcy in Illinois: The means test

Many Chicago area residents and individuals all around the State of Illinois take advantage of state and federal bankruptcy laws for a variety of reasons. A sudden illness or traffic collision can lead to job loss, financial instability and a stack of unpaid bills. For whatever reason, when someone wants to file a bankruptcy petition, they must first qualify for relief by passing the Illinois means test. Generally, the means test is a calculation of finances and numbers used to determine if an individual legitimately needs bankruptcy protection and is financially burdened without bankruptcy relief.

If the means test indicates you make too much money to qualify for Chapter 7, you may still be able to eliminate a portion of debt through Chapter 13 bankruptcy reorganization.

Chapter 13 bankruptcy may be a good option for you if you make too much money to qualify for a full discharge under Chapter 7. It is referred to as “reorganization” when you file for bankruptcy under Chapter 13. The bankruptcy trustee will review your means test results, income, and assets to determine how much of your outstanding debt may be discharged, and how much you will agree to retain. The amount you will still be responsible for is paid back through monthly payments to the trustee. Chapter 13 bankruptcy can last for more than a year and at the point you are caught up with your past-due obligations, your case is settled, the bankruptcy proceedings terminate, and you go on with your life.

Regardless whether you proceed in bankruptcy in Chapter 7 or 13, the Automatic Stay provision is still effective to stop creditors from any collection activity while you are in bankruptcy. To learn more, see our article: THE AUTOMATIC STAY: IT STOPS BILL COLLECTORS IN THEIR TRACKS.

Your monthly household income is measured to determine if you are allowed a presumption that you pass the means test and can proceed with a Chapter 7 discharge. There is an Illinois median income for households, based on the number of people in your household. For example, if you are a 1 member household, the median annual income is $48,239 and if you make less, you qualify. Now, if you have a household of 4 members, the median annual income test is $84,901.[i]

The calculations come into play if your household makes more than the Illinois median income test.

It is important to consult and experienced bankruptcy attorney if you plan to proceed with bankruptcy. Many Illinois families include several children who do not contribute income to the family and the median test for a family of 4 as seen above is close to twice that of a single person. What the bankruptcy attorney can do next is calculate income and expenses to determine if the individual can pass the means test for bankruptcy, whether they have the means to pay their debts, or qualify for a Chapter 7 discharge.

To pass the means test to qualify for Chapter 7 bankruptcy, you can ask one of the attorneys at Joseph Wrobel, Ltd., to review your financials and suggest whether you can obtain bankruptcy protection and wipe your debts out or apply for Chapter 13 and discharge some and get caught up on the rest, on a reasonable payment schedule you can afford.

Joseph Wrobel, Ltd. helps people get control of their finances and a fresh start at financial freedom. The firm’s website contains informative videos about financial issues as well as bankruptcy protection for families who want a fresh start. To keep in touch and read about consumer finance news and stories you can “Like” the firm’s Facebook page and “Follow” Joseph Wrobel. Ltd. on Twitter. If you need immediate legal assistance, please call Joseph Wrobel, Ltd. by calling (312) 781-0996 to talk to an attorney today.


[i] LegalConsumer, Illinois Median Income Test, Jul. 17, 2015