Understanding the Bankruptcy Means Test in Washington

In Washington State, the bankruptcy means test is a crucial step for individuals considering filing for Chapter 7 bankruptcy. This test determines eligibility based on income and expenses, ensuring that the bankruptcy process is equitably available to those who genuinely cannot repay their debts.

The means test compares your average monthly income over the six months preceding your bankruptcy filing to the median income for a household of your size in Washington. As of 2023, the median income for a single-person household in Washington is approximately $73,000 annually, while the figures vary based on family size. If your income is below the state median, you pass the means test automatically.

If your income exceeds the median, the next step is to calculate your disposable income by deducting specific allowable expenses from your monthly income. These expenses might include housing costs, childcare, healthcare, and transportation expenses, as well as any secured debts like mortgages or car loans.

Understanding the means test is vital as it can significantly affect your bankruptcy options. If you fail the means test, you may not qualify for Chapter 7 bankruptcy and may have to consider filing for Chapter 13 bankruptcy instead, which involves creating a repayment plan to pay back creditors over three to five years.

It’s also important to note that there are exemptions to the means test, such as certain disability payments or income derived from Social Security. If applicable, these amounts may be excluded from your income calculations.

To navigate the complexities of the means test effectively, it is advisable to consult with a qualified bankruptcy attorney in Washington. They can provide valuable insights into your specific financial situation and assist you in determining your options.

In summary, the bankruptcy means test plays a vital role in Washington’s bankruptcy process, influencing eligibility for Chapter 7 and shaping your path toward financial relief. Understanding this test will empower you to make informed decisions as you consider your bankruptcy options.