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Do you pass the means test for Louisiana Chapter 7 bankruptcy?

On Behalf of | Aug 23, 2019 | Chapter 7 Bankruptcy

If you have found yourself struggling to keep your debt under control, bankruptcy may seem increasingly appealing. Chapter 7 bankruptcy, in particular, offers a host of benefits for those struggling with overwhelming debt.


In addition to an automatic stay that ends collection activity, people can receive a discharge of their unsecured debt without repayment if they qualify for Chapter 7 bankruptcy. Chapter 13 bankruptcy requires a repayment period before discharge, which may not make it the best option for some people.

However, in order to protect lenders from victimization by those who would unscrupulously abuse the bankruptcy system for financial gain, there are specific limits on the income people can have when filing for Chapter 7 bankruptcy, as well as limits to the assets they can maintain without liquidating them to repay creditors. You must pass a means test if you want to move forward with Chapter 7 proceedings.

The means test involves comparing your income to the state median

What it costs for a family to have a reasonable standard of living is different in different states. To make bankruptcy as fair and reasonable as possible, the means test varies depending on the state in which a person files, as well as the size of their family.

For a single person with no dependents, the current income cap for Chapter 7 bankruptcy in Louisiana is $45,045. For couples or adults with a single dependent, that income cap increases to $54,047. For families with three or more people, the median income increases to $64,002, while families of four need to have an income of under $78,489 to qualify.  These amounts are adjusted every six months.

If you are relatively close to those amounts, talking with an attorney can be particularly beneficial, as they can help you understand whether you do qualify for Chapter 7.

Your assets could be an issue as well

Do you have a lot of equity in your home and other valuable assets? If so, you may have to liquidate or sell those assets as part of Chapter 7 proceedings. Chapter 13 bankruptcy typically does not require the liquidation of assets.

Those who don’t qualify can still file for Chapter 13

Even if Chapter 7 bankruptcy is not an option for your family, you may still be able to file for Chapter 13 bankruptcy. Both kinds of bankruptcy have different benefits. Discuss which option is better for you and your family with someone experienced with bankruptcy proceedings.