Means Test Requirements

• The means test is part of determining your eligibility to successfully file for Chapter 7 bankruptcy. The test is performed by deducting certain expenses from your monthly income to determine how much disposable income you bring in. These expenses include your unsecured debts like credit card payments and secured debts like a mortgage payment. If your disposable income is below the median income level for your state after your deductions, you are ruled eligible for Chapter 7 bankruptcy. If your disposable income is too high, you may be able to file for Chapter 13 bankruptcy.
  
  

Chapter 13 Repayment

• If you fail the means test associated with Chapter 7 bankruptcy eligibility, you may attempt to file for Chapter 13 bankruptcy. The results of the means test are still important to you in Chapter 13 because you must look at your disposable income and determine if you have enough unallocated cash to make payments to your creditors. Chapter 13 bankruptcy requires a repayment plan that successfully pays down your debt over a three- to five-year period. If you do not have adequate income to create a repayment plan that satisfies the court, you may be ruled ineligible for Chapter 13 bankruptcy.
  
  

Business Bankruptcy

• Any business may file for Chapter 7 bankruptcy liquidation. This form of business bankruptcy effectively closes the business and sells off business assets to pay creditors. The difference with a business filing Chapter 7 bankruptcy as opposed to a consumer is the means test requirement. A business is not required to pass a means test in order to be eligible to file for Chapter 7. This can be advantageous for a business created as a sole proprietorship or partnership where the business owners are at risk of being personally liable for business debts.
  
  

Corporate Restructuring

• Any corporation in the United States may file Chapter 11 bankruptcy, also known as corporate restructuring. Under this form of bankruptcy, a corporation submits its proposal to reorganize the company in an attempt to regain profitability. Management continues the daily running of the corporation but all business moves relating to acquisitions or other significant business operations require court approval. According to the Securities and Exchange Commission, if a corporation successfully emerges from Chapter 11 reorganization, its creditors become primary shareholders of the company.