Now to fill a Chapter 7 bankruptcy you must measure your current monthly income (average income over the last six months before you file) against the median income for a family of your size in your state.

You will be able to file for Chapter 7 if your income is less than or equal to the median. If it is higher than the median, you must pass another requirement of the new bankruptcy law in order to file for Chapter 7, called "The Means Test."

Created to find out whether you have enough disposable income to make payments on a Chapter 13 plan, the means test is basically getting your current monthly income and subtract certain allowed expenses (set by the IRS) and monthly payments you will have to make on secured debts (mortgage or car loan) and priority debts (taxes, child support, alimony, and wages owed to employees.)

If after subtracting these amounts your total monthly disposable income is less than $100, you pass the means test, and will be allowed to file for Chapter 7.

If your total remaining monthly disposable income is more than $166.66, you have flunked the means test, and will be prohibited from using Chapter 7.

If your remaining monthly disposable income is somewhere between $100 and $166.66, you must figure out whether the money you have left is enough to pay more than 25% of your unsecured, non priority debts (medical bills, credit card bills, student loans) over a 5 year period. If so, you flunk the means test, and won't be able to fill Chapter 7. If not, you pass the means test, and Chapter 7 can be used to wipe out your debts.

“Money does not solve money problems.” - Dr. Phil McGraw (Author and Host of the Dr. Phil Show on NBC television.)

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