Texas Chapter 7 Means Test Calculator

Texas Chapter 7 Means Test Calculator

Use this calculator to estimate whether your income falls below the median income for a household of your size in Texas, or if your disposable income is low enough to qualify for Chapter 7 bankruptcy under the Means Test. This tool provides an estimate and is not legal advice. Always consult with a qualified bankruptcy attorney.

function getTexasMedianIncome(householdSize) { // Example Texas median incomes (annual) for 2023/2024. // These figures are illustrative and should be verified with current DOJ data. var medianIncomes = { 1: 65000, 2: 85000, 3: 95000, 4: 110000 }; if (householdSize 4) { // For each additional person over 4, add $9,900 annually ($825 monthly) var baseMedian = medianIncomes[4]; var additionalIncome = (householdSize – 4) * 9900; return (baseMedian + additionalIncome) / 12; // Convert to monthly } return 0; // Should not happen with min="1″ } function calculateMeansTest() { var householdSize = parseFloat(document.getElementById('householdSize').value); var grossMonthlyIncome = parseFloat(document.getElementById('grossMonthlyIncome').value); var securedDebtPayments = parseFloat(document.getElementById('securedDebtPayments').value); var priorityDebtPayments = parseFloat(document.getElementById('priorityDebtPayments').value); var healthInsurancePremiums = parseFloat(document.getElementById('healthInsurancePremiums').value); var childcareExpenses = parseFloat(document.getElementById('childcareExpenses').value); var educationExpenses = parseFloat(document.getElementById('educationExpenses').value); var courtOrderedPayments = parseFloat(document.getElementById('courtOrderedPayments').value); var charitableContributions = parseFloat(document.getElementById('charitableContributions').value); var irsStandards = parseFloat(document.getElementById('irsStandards').value); var unsecuredDebtTotal = parseFloat(document.getElementById('unsecuredDebtTotal').value); var resultDiv = document.getElementById('result'); resultDiv.innerHTML = "; // Clear previous results // Input validation if (isNaN(householdSize) || householdSize < 1 || isNaN(grossMonthlyIncome) || grossMonthlyIncome < 0 || isNaN(securedDebtPayments) || securedDebtPayments < 0 || isNaN(priorityDebtPayments) || priorityDebtPayments < 0 || isNaN(healthInsurancePremiums) || healthInsurancePremiums < 0 || isNaN(childcareExpenses) || childcareExpenses < 0 || isNaN(educationExpenses) || educationExpenses < 0 || isNaN(courtOrderedPayments) || courtOrderedPayments < 0 || isNaN(charitableContributions) || charitableContributions < 0 || isNaN(irsStandards) || irsStandards < 0 || isNaN(unsecuredDebtTotal) || unsecuredDebtTotal < 0) { resultDiv.innerHTML = 'Please enter valid positive numbers for all fields.'; return; } var texasMedianMonthlyIncome = getTexasMedianIncome(householdSize); var output = '

Means Test Results:

'; output += 'Your Average Gross Monthly Income: $' + grossMonthlyIncome.toFixed(2) + "; output += 'Texas Median Monthly Income for Household Size ' + householdSize + ': $' + texasMedianMonthlyIncome.toFixed(2) + "; if (grossMonthlyIncome < texasMedianMonthlyIncome) { output += 'Your average gross monthly income ($' + grossMonthlyIncome.toFixed(2) + ') is below the Texas median income for your household size ($' + texasMedianMonthlyIncome.toFixed(2) + ').'; output += 'You generally pass the Means Test and are presumed eligible for Chapter 7 bankruptcy.'; } else { output += 'Your average gross monthly income ($' + grossMonthlyIncome.toFixed(2) + ') is above the Texas median income for your household size ($' + texasMedianMonthlyIncome.toFixed(2) + ').'; output += 'Therefore, a more detailed calculation of your disposable income is required.'; // Calculate allowed expenses var totalAllowedExpenses = securedDebtPayments + priorityDebtPayments + healthInsurancePremiums + childcareExpenses + educationExpenses + courtOrderedPayments + Math.min(charitableContributions, grossMonthlyIncome * 0.15) + // Charitable contributions capped at 15% of gross income irsStandards; var disposableIncome = grossMonthlyIncome – totalAllowedExpenses; var disposableIncomeOver60Months = disposableIncome * 60; output += 'Total Allowed Monthly Expenses: $' + totalAllowedExpenses.toFixed(2) + "; output += 'Your Monthly Disposable Income: $' + disposableIncome.toFixed(2) + "; output += 'Your Disposable Income Over 60 Months: $' + disposableIncomeOver60Months.toFixed(2) + "; var threshold1 = 13650; // As of recent updates, check current values var threshold2 = 22850; // As of recent updates, check current values var unsecuredDebtThreshold = unsecuredDebtTotal * 0.25; if (disposableIncomeOver60Months < threshold1) { output += 'Your disposable income over 60 months ($' + disposableIncomeOver60Months.toFixed(2) + ') is less than $' + threshold1.toFixed(2) + '.'; output += 'You generally pass the Means Test and are presumed eligible for Chapter 7 bankruptcy.'; } else if (disposableIncomeOver60Months >= threshold2) { output += 'Your disposable income over 60 months ($' + disposableIncomeOver60Months.toFixed(2) + ') is greater than or equal to $' + threshold2.toFixed(2) + '.'; output += 'You generally do NOT pass the Means Test and may not be eligible for Chapter 7 bankruptcy.'; output += 'You may need to consider Chapter 13 bankruptcy or other debt relief options.'; } else { // Between $13,650 and $22,850 output += 'Your disposable income over 60 months ($' + disposableIncomeOver60Months.toFixed(2) + ') is between $' + threshold1.toFixed(2) + ' and $' + threshold2.toFixed(2) + '.'; output += 'We now compare it to 25% of your non-priority unsecured debt.'; output += '25% of Your Non-Priority Unsecured Debt: $' + unsecuredDebtThreshold.toFixed(2) + "; if (disposableIncomeOver60Months < unsecuredDebtThreshold) { output += 'Your disposable income over 60 months ($' + disposableIncomeOver60Months.toFixed(2) + ') is less than 25% of your non-priority unsecured debt ($' + unsecuredDebtThreshold.toFixed(2) + ').'; output += 'You generally pass the Means Test and are presumed eligible for Chapter 7 bankruptcy.'; } else { output += 'Your disposable income over 60 months ($' + disposableIncomeOver60Months.toFixed(2) + ') is greater than or equal to 25% of your non-priority unsecured debt ($' + unsecuredDebtThreshold.toFixed(2) + ').'; output += 'You generally do NOT pass the Means Test and may not be eligible for Chapter 7 bankruptcy.'; output += 'You may need to consider Chapter 13 bankruptcy or other debt relief options.'; } } } output += 'Disclaimer: This calculator provides an estimate based on the information provided and general Means Test guidelines. It is not legal advice. The actual median income figures and expense standards are updated periodically by the Department of Justice and can vary by location. You should always consult with a qualified bankruptcy attorney to discuss your specific situation and eligibility.'; resultDiv.innerHTML = output; } .calculator-container { font-family: 'Arial', sans-serif; background-color: #f9f9f9; padding: 25px; border-radius: 8px; box-shadow: 0 2px 10px rgba(0, 0, 0, 0.1); max-width: 700px; margin: 20px auto; border: 1px solid #ddd; } .calculator-container h2 { color: #333; text-align: center; margin-bottom: 20px; font-size: 24px; } .calculator-container p { color: #555; line-height: 1.6; margin-bottom: 15px; } .calculator-form .form-group { margin-bottom: 15px; display: flex; flex-direction: column; } .calculator-form label { margin-bottom: 5px; color: #333; font-weight: bold; font-size: 15px; } .calculator-form input[type="number"] { padding: 10px; border: 1px solid #ccc; border-radius: 4px; font-size: 16px; width: 100%; box-sizing: border-box; } .calculate-button { background-color: #007bff; color: white; padding: 12px 20px; border: none; border-radius: 5px; cursor: pointer; font-size: 18px; display: block; width: 100%; margin-top: 20px; transition: background-color 0.3s ease; } .calculate-button:hover { background-color: #0056b3; } .calculator-result { margin-top: 30px; padding: 20px; background-color: #e9f7ef; border: 1px solid #d4edda; border-radius: 8px; color: #155724; } .calculator-result h3 { color: #007bff; margin-top: 0; margin-bottom: 15px; font-size: 20px; } .calculator-result p { margin-bottom: 10px; font-size: 16px; } .calculator-result p.success { color: #28a745; font-weight: bold; } .calculator-result p.warning { color: #ffc107; font-weight: bold; } .calculator-result p.error { color: #dc3545; font-weight: bold; } .calculator-result p.note { font-style: italic; color: #6c757d; } .calculator-result p.disclaimer { font-size: 14px; color: #6c757d; margin-top: 20px; border-top: 1px solid #eee; padding-top: 15px; }

Understanding the Texas Chapter 7 Means Test

The Chapter 7 Means Test is a crucial component of the bankruptcy process, designed to determine if an individual's income is low enough to qualify for Chapter 7 bankruptcy. This test was introduced with the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) to ensure that debtors with the ability to repay some of their debts file for Chapter 13 bankruptcy, which involves a repayment plan, rather than Chapter 7, which typically results in the discharge of most unsecured debts.

What is Chapter 7 Bankruptcy?

Chapter 7 bankruptcy, often referred to as "liquidation bankruptcy," allows individuals to eliminate most of their unsecured debts, such as credit card balances, medical bills, and personal loans. In exchange, a bankruptcy trustee may sell non-exempt assets to pay creditors. However, most Chapter 7 filers are able to keep all of their property due to state and federal exemption laws.

The Purpose of the Means Test

The primary goal of the Means Test is to prevent higher-income debtors from filing Chapter 7 when they could reasonably afford to repay a portion of their debts through a Chapter 13 plan. If you "pass" the Means Test, you are generally presumed eligible for Chapter 7. If you "fail" it, you may be required to file Chapter 13 or explore other debt relief options.

How the Means Test Works in Texas

The Means Test involves a two-part calculation:

Part 1: Comparison to State Median Income

The first step compares your "current monthly income" (CMI) to the median income for a household of the same size in Texas. Your CMI is generally the average of your gross monthly income from all sources (excluding certain benefits like Social Security) over the six full calendar months preceding your bankruptcy filing. If your CMI is below the Texas median income for your household size, you generally pass the Means Test and are presumed eligible for Chapter 7.

Example: If a single individual in Texas has an average gross monthly income of $4,000, and the Texas median income for a one-person household is $5,416.67 per month, they would pass this first part of the test.

Part 2: Disposable Income Calculation (If Above Median Income)

If your CMI is above the Texas median income, you must proceed to the second part of the Means Test, which calculates your "disposable income." This involves subtracting a series of allowed expenses from your CMI. These allowed expenses are not necessarily your actual expenses but are determined by a combination of:

  • IRS National Standards: Fixed amounts for food, clothing, personal care, and miscellaneous expenses, based on household size.
  • IRS Local Standards: Amounts for housing, utilities, and transportation, which vary by county and household size.
  • Actual Necessary Expenses: Certain actual expenses are allowed, such as:
    • Monthly payments on secured debts (e.g., mortgage, car loans).
    • Monthly payments on priority debts (e.g., child support, alimony, recent taxes).
    • Health insurance premiums.
    • Childcare expenses.
    • Education expenses for dependent children.
    • Court-ordered payments (e.g., fines, restitution).
    • Charitable contributions (up to 15% of gross income).

After subtracting these allowed expenses from your CMI, the remaining amount is your monthly disposable income. This figure is then multiplied by 60 (for 60 months, or five years) to determine your total projected disposable income over that period.

Disposable Income Thresholds

The 60-month disposable income is then compared to specific thresholds:

  • If your 60-month disposable income is less than $13,650, you generally pass the Means Test.
  • If your 60-month disposable income is greater than or equal to $22,850, you generally fail the Means Test.
  • If your 60-month disposable income falls between $13,650 and $22,850, a further comparison is made:
    • If it's less than 25% of your total non-priority unsecured debt (e.g., credit cards, medical bills), you pass.
    • If it's greater than or equal to 25% of your total non-priority unsecured debt, you fail.

Example: If a Texas family's CMI is above the median, but after subtracting allowed expenses, their monthly disposable income is $150, their 60-month disposable income would be $9,000. Since $9,000 is less than $13,650, they would pass the Means Test.

Important Considerations

  • Current Data: The median income figures and IRS expense standards are updated periodically by the Department of Justice (DOJ). It is crucial to use the most current data available for your specific filing date and county.
  • Exemptions: Certain types of income, like Social Security benefits, are generally excluded from the CMI calculation.
  • Special Circumstances: There are exceptions and special circumstances that can affect the Means Test, such as active duty military service, disabled veterans, or significant medical expenses.
  • Not Legal Advice: This calculator and information provide a general overview. Bankruptcy law is complex, and the Means Test can have intricate details. Always consult with an experienced bankruptcy attorney in Texas to get accurate advice tailored to your unique financial situation. They can help you gather the correct figures, apply the law properly, and determine the best course of action for your debt relief.

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