Means Test

Serving Clients in All Surrounding Arkansas Counties 

When it comes to Chapter 7 bankruptcy in Arkansas, the Chapter 7 means test may come into play. If your annual household income for your household size is below the Arkansas median income, the means test will not apply, and you may file a Chapter 7 bankruptcy. However, if you are a higher-income filer, you must pass the test.

The purpose of a Chapter 7 means test is to determine whether you can pay back some of your unsecured debts by filing a Chapter 13 bankruptcy.

Exemptions from Means Test

You may be exempt from the Arkansas means test if you meet one or both of the following criteria:

• Your debts are not primarily consumer debts.
• You are a disabled veteran, and you incurred your debt primarily while you were on active duty in the military service.

Determining Arkansas Median Income

If your household income is below the Arkansas median income for your household size, you are exempt from the Arkansas means test and may file a Chapter 7 bankruptcy.

Your household income is determined by averaging your monthly income over the previous six calendar months. That number is then multiplied by 12 to determine your annual household income. As of April 1, 2022, the annual household income for Arkansas ranges from $48,882 for a household of One (1), to $71,383 for a household of four (4) up to $116,383 for a household of nine (9). 

If your household income exceeds the Arkansas median income threshold for a household of your size, you must go through the Chapter 7 means test.

Completing the Chapter 7 Means Test

The Chapter 7 means test involves calculating all of your income and expense information for a given year. For purposes of the means test, “income” includes all income from any source, except Social Security benefits and VA Disability benefits.

After you have assembled all your income and expense information, you must then subtract out all of your allowed expenses. This final number determines the amount of income you may have available under the bankruptcy law to pay your unsecured creditors (if any) via a Chapter 13 bankruptcy plan.

Contact an Arkansas Bankruptcy Lawyer today to help you navigate the Bankruptcy Means Test

Arkansas bankruptcy law is extremely complex, but that’s not a problem because Niblock & Associates have been making it work for Arkansans since 1988 and filed successfully filed over 15,000 bankruptcy cases to prove it.  We can assist you in navigating the bankruptcy Means Test.

One final note, just because the Means Test allows you to file a Chapter 7 bankruptcy it does not necessarily mean you should.  To evaluate and consider all of your options under the law, taking into account your own specific personal circumstances and finances, contact Niblock & Associates today.