At Skrupa Law Office LLC, one of the best bankruptcy law offices in Omaha and Lincoln, our team of expert bankruptcy attorneys are here to explain the Nebraska bankruptcy means test. When you file for a Chapter 7 bankruptcy you will also have to pass the means test for Nebraska. If you have an income lower than the Nebraska median for the size of your household, then you are exempt from the test and you’ll be allowed to file a Chapter 7.
The means test is meant to be taken by those in higher income brackets in order to determine if they are able to pay back a portion of their debt. If this applies to you, and you can pay back a portion of what you owe, then you will have to file for Chapter 13 bankruptcy instead.
What the Means Test Entails
The means test determines whether your monthly income is less than Nebraska’s median income for the size of your household. Your household income is calculated by averaging your monthly income for the last six months. Once you figure out your average monthly income, multiply it by 12 to calculate your average yearly income.
Note: If your income has recently decreased, then waiting a few more months might put your income under the median level for Nebraska and you can then file for Chapter 7.
The means test also calculates your income and expenses. To complete the test, you will need your current monthly income (including business income, rental income, unemployment income, retirement plans/pensions, dividends, or sum of money anyone else may be paying toward your expenses). You should also include debts that you are legally required to pay, as well as expenses for health care. These requirements come from the Census Bureau and the IRS.
After you have calculated your allowed expenses for the state of Nebraska, subtract that total from your monthly income to determine how much you have left over to pay creditors in the event of a Chapter 13 bankruptcy. If your monthly income for the next 60 months is more than $12,475, you cannot file for a Chapter 7 bankruptcy. If your income is less than $ 7,475, you pass the means test and can file for a Chapter 7. Call Skrupa Law today to find out what options are best for you. Note: If your income is between those two numbers, then more calculations are required.
Exemptions from Taking the Means Test
If you are disabled and you accrued your debts while on active duty, then you are exempt from taking the means test. You are also exempt if your debts are not consumer debts.