In order for an individual or business to file for Chapter 7 bankruptcy, their income must not exceed a certain threshold as determined through Missouri means testing. This testing is used to determine whether a debtor has enough income to repay a portion of their debts through a Chapter 13 repayment plan instead.

The Missouri means test requires the debtor to average their total household income over the last 6 calendar months. Once your average monthly income has been determined, this figure is multiplied by 12 for an estimated annual income. This estimated annual income is then compared to the state’s median annual income (as reported by the U.S. Census Bureau) for a household of the same size. If the estimated annual income is below the median, the debtor typically qualifies to file for Chapter 7 bankruptcy.

If the estimated annual income is above Missouri’s median annual income for a household the same size, they must go through additional calculations that subtract certain allowed expenses such as housing, food, and transportation to determine their disposable income. If their disposable income shows that they are able to pay the minimum monthly payment as required by their unsecured creditors for 60 months, their case will either be dismissed or converted to Chapter 13 unless special circumstances exist.

You may be exempt from Missouri Means Testing if:

• Your monthly income is below the Missouri median for your household size
• Your debts are primarily “business” debts (business loans, trade credit or vendor debts, debts for business-related equipment or supplies, tax debts related to self-employment, etc.)
• You are a disabled veteran who accrued your debt primarily during active duty or performing a homeland defense activity

When a Chapter 7 case is filed by someone who has been deemed ineligible for Chapter 7 via the means test, that person is presumed to have abused the Chapter 7 laws. If a presumption of abuse arises in the case, the case will be dismissed or converted to a Chapter 13 case unless the person filing can prove the existence of special circumstances such as a serious medical condition.

• Your income is too high – If you did not pass the means test, your case will be dismissed or converted to Chapter 13 unless special circumstances can be proven
• You recently received a Chapter 7 discharge – Debtors must wait 8 years between Chapter 7 filings
• You have mostly non-dischargeable debts – Debts such as student loans, child support, alimony, and most taxes typically are not erased in Chapter 7
• You are concerned about a co-signer – Creditors can still pursue co-signers even when the other co-signer(s) have filed for relief

For more information on eligibility after filing, please visit the “Chapter 7 Discharge” resource linked below.