Ohio Chapter 7 Means Test Calculator: Estimate Qualification and Cost

Chapter 7 Means Test Explanation

The means test will examine your income and see how it compares to others in your state. They get those figures from the Census Bureau. They will look at your average monthly income and then annualize it to determine your average annual income.

You fill in your average monthly income from all sources during the six months before you file for bankruptcy. For example, if you're filing on September 15, they will look at your income from March 1 through August 31. If your income fluctuated during those six months, add it up and divide it by six. Make sure you don't include the same income more than once. If you and your spouse own the same rental property, just put the income from that property in one column.

Note: If you're finding that your income fluctuates, you can take the average monthly gross income for your household over the last six months and put that value over 12 months. That way, you can compare that value to the income threshold for your state and household size.

Let's discuss Ohio's bankruptcy means test calculation for bankruptcy cases filed in 2023.

Ohio Chapter 7 Bankruptcy Income Limit

First, let's discuss Ohio's Chapter 7 bankruptcy income limit. These figures change every six months or so, so you should be able to use the free Chapter 7 calculator, which has the most up-to-date data.

Suppose you are filing for bankruptcy in Ohio on or after November 1, 2024. In that case, you'll want to pay close attention to these income thresholds to determine whether you may qualify for bankruptcy relief. Keep in mind that you will want to be at or below these figures depending on household size:

You should be able to add $9,900 for each additional member if you have more than nine family members.

What Is Considered Income?

Not all income counts when it comes to this test. For instance, disability and social security income may not have to be included in the bankruptcy means test.

The test includes any income regularly paid by someone other than the debtor to cover household expenses. It's a broad definition, so let's look at some of the income types that fall under this umbrella:

1. Salaried income
2. Spousal income applies if you're filing jointly or not legally separated.
3. Hourly and overtime income
4. 1099 Income
5. Net Rental Income
6. Ohio government income
7. Child support and Alimony
8. Dividend, Interest, and Royalties: Money from stocks, investments, etc.
9. Pension and Retirement Income
10. Net business income
11. Annuity payments
12. Unemployment compensation
13. Worker's Compensation Benefits

Now that we've covered income, let's take a quick look at how household size is calculated.

What Is Considered In Household Size?

Another question that often pops up is how household size is determined. For example, your roommate might not be considered part of your household size. However, your children, who you claim as dependents on your taxes, are included.

Things can get tricky if you have children away at college or are engaged but not yet married. Different bankruptcy jurisdictions in Ohio might have rules about who can be counted in your household size. Generally, it usually goes by the saying “heads on beds,” and sometimes the attorney may look at who is filed within your taxes, so be sure to seek council.

Timeframe of Filing Another Bankruptcy

If you filed for bankruptcy in the past and are looking to file again, be sure that the appropriate amount of time has passed. Before you file another chapter of bankruptcy, you may have to wait a few years. Check out the timeframe below:

Chapter Filed Earlier, Chapter to be Filed, Time Restriction

• Chapter 13, Chapter 13, 2 years between filing
• Chapter 7, Chapter 13, 4 years between filing
• Chapter 13, Chapter 7, 6 years between filing
• Chapter 7, Chapter 7, 8 years between filing 

Ohio Above Median Bankruptcy Means Test

If your income exceeds the means test annual income, you might still be eligible for Chapter 7 bankruptcy based on a couple of means test forms.

The first one is called the "Statement of Exemption from Presumption of Abuse Under §707(b)(2)". It's a way to prove you're not trying to take advantage of the bankruptcy system. The second form is the "Chapter 7 Means Test Calculation". This allows you to deduct your allowable monthly expenses from your current income. By doing this, you can determine your disposable income, the money you have left after paying your necessary expenses.

Remember that the expenses used in the means test are a mix of national and Ohio costs. So, it's essential to consider that when calculating your disposable income.

Disposable income is the money you have left over after paying all your expenses. If your disposable income is below a certain amount, you might still qualify for Chapter 7 bankruptcy.

We have an Ohio above-median bankruptcy means test calculator below. It uses both forms we discussed earlier to help you determine your allowable expenses and estimate your eligibility for Chapter 7 bankruptcy.

Allowable deductible expenses

Here are the expenses that you may deduct in a bankruptcy:

• You may be able to deduct certain mandatory employment expenses like union dues, retirement plans, and even uniforms.
• Health and disability insurance premiums
• Income taxes
• Child care expenses
• Term life insurance premiums
• If you're making payments on your car or home
• Alimony and child support payments
• Charitable contributions

You might be able to deduct other expenses, depending on your circumstances. These deductions are limited and vary based on the number of people in your household. The maximum amounts allowed for these expenses are in the current national standards.

These expenses include housekeeping supplies, clothing, food, personal care services and products, housing and utility, transportation, and out-of-pocket healthcare expenses.

Taking the Ohio Means Test calculator and speaking with a local bankruptcy attorney may be helpful. They can provide a free evaluation and help you navigate through this process.

What Happens If You Fail the Bankruptcy Means Test?

You still have options if you do not pass the means test.

One alternative you can explore is filing for Chapter 13 bankruptcy in Ohio. This type of bankruptcy allows you to create a repayment plan to settle your debts over a specific period.

Another option worth considering is looking into bankruptcy alternatives. These alternatives, like debt settlement, debt management, or debt payoff planning, offer different approaches to help you get back on track with your finances.

Chapter 13 Bankruptcy

A Chapter 13 bankruptcy in Ohio is what they call a wage earner's plan. It's a way to pay back a portion of your unsecured debts through a payment plan. Your non-exempt equity and disposable income determine the payment plan. The good news is that you can typically keep your assets if you don't exceed the debt limits. It only stays on your credit report for seven years instead of 10 years, like Chapter 7 does. The length of the payment plan can vary. It could take you 36 or 60 months to complete it, and your payment plan might be shorter if you're in a 100% Chapter 13.

However, with Chapter 13, failing the means test means you do not have enough disposable income to pay the bankruptcy trustee at the end of each month. Because of this, the court cannot grant you a Chapter 13 bankruptcy, which may require sizable monthly payments.

Some individuals prefer Chapter 13 over Chapter 7 bankruptcy if they have more equity than what's allowed under the Ohio bankruptcy exemption so they can protect their assets while still dealing with their debts. Another reason is it can help with a foreclosure.

Debt Settlement

Debt settlement is when you or a company negotiate with your creditors to lower the amount of debt you owe. They forgive some of what you should pay back. For example, if you owe around $50,000, a debt settlement company can try to negotiate to bring that down to just $25,000.

Debt settlement usually comes with a payment plan that lasts anywhere from 12 to 60 months. Remember that not all debt settlement companies are the same. Some charge 25% (or higher) of your enrolled debt, which can add up to a lot throughout the program. Make sure you do your research before diving in. You can check out the Consumer Finance Protection Bureau for the latest information on debt settlement programs.

Debt settlement companies can typically serve nationwide, so don't worry about finding one locally.

Cons of Debt Settlement

This option has some potential negatives, namely that you tend to have to miss a few payments for your creditors to be willing to negotiate. Not only does this put you at risk of being sued by the creditor, but it also impacts your credit score for up to seven years.

Additionally, there is no legal protection, so if a creditor does not agree to a negotiated payment plan, they may sue you. If a creditor sues you, that may go on your credit report. 

There are also potential taxes on the forgiven debt. Whatever debt was forgiven in the settlement may be taxable, and you have to report the canceled debt on your tax return for the year it was canceled. Generally, you may have to report any taxable amount of canceled debt as income. The creditor may send you a 1099-C form you would have to fill out.

Debt Management

Debt management, or credit counseling, is a plan to negotiate lower interest rates on your debt. These companies can negotiate a 22% interest rate to a much more manageable 9%. They are experts at dealing with credit cards. However, they may not be able to help with unsecured personal loans. Debt management is a payment plan lasting anywhere from 36 to 60 months.

The pro of this program is that it may allow you to pay into the principal rather than the increasing interest. So, if you have credit cards with high interest rates and want a less aggressive option, this may be something to look into. 

The downside to this option is that you still have to pay off everything you owe, so it may be a more expensive option. The good news is that it won’t hurt your credit as much as some of the other options may. However, the accounts in the program will close, which may take a small hit on your credit.

The debt management firms are also typically national, meaning you don't have to search for one in your area.

Summary

Understanding the bankruptcy means test and income limit in Ohio for Chapter 7 bankruptcy qualification can be overwhelming. Many people go for Chapter 7 bankruptcy because it's often cheaper than other ways to get rid of debt.

Here is the breakdown of the Chapter 7 bankruptcy means test and income limit work in Ohio:

1. The first part compares your household income to the Ohio income limit. It considers certain incomes included and excluded.
2. If your household makes more than the income limit! You might still qualify for Chapter 7 bankruptcy in Ohio based on your expenses and deductions.
3. If you don't pass the bankruptcy means test, don't fret. Other options include Chapter 13 bankruptcy, debt settlement, and debt management.

I hope this article has shed some light on the subject. If you want to estimate your Chapter 7 qualification, use the Ohio bankruptcy means test calculator below.