Many people in Kentucky and across the United States struggle with credit card debt, medical bills, mortgages and other expenses. If you are overwhelmed with financial burdens, bankruptcy may be one option to help you emerge with a clean slate.

According to the U.S. Courts, 479,043 people filed for Chapter 7 bankruptcy in 2019 alone. Yet, not everyone can file for Chapter 7 bankruptcy. You must meet certain criteria before the court will consider your Chapter 7 application.

What is the state means test?

Otherwise known as liquidation bankruptcy, Chapter 7 discharges unsecured debt. Yet you must prove that you are unable to pay off the accumulated debt. Many states use a means test to identify whether you qualify for Chapter 7. The test determines whether your income is at or below the average household income for your family size in Kentucky.

If you fail the state means test, you can still qualify for liquidation bankruptcy. The court will calculate your expenses and subtract it from your total income to see if you have enough money left over to make a payment toward your debt.

What other qualifications are considered?

Once you pass the state means test, there are other factors that must be looked at before your bankruptcy will be considered. The U.S. Courts reports that you must:

  • Pay a filing and administration fee
  • Complete a credit counseling course
  • Not have filed for bankruptcy within the past 180 days

It is critical that you fill out all of the bankruptcy paperwork completely in order to avoid having your case denied.