WV Chapter 7 Means Test: Income Limits, Eligibility & How to Qualify

Table of Contents#

1. What is the Chapter 7 Means Test?
2. Purpose of the Means Test
3. West Virginia Chapter 7 Income Limits (2024)
4. Calculating Your Income for the Means Test
5. Deductions & Expenses: The "Second Step" of the Means Test
6. Eligibility Steps for WV Chapter 7
7. Common Mistakes to Avoid
8. FAQs About the WV Chapter 7 Means Test
9. Reference

1. What is the Chapter 7 Means Test?#

The Chapter 7 Means Test is a legal requirement under the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005. It acts as a "financial screening tool" to ensure that only individuals with limited income—who cannot reasonably repay their debts—qualify for Chapter 7 bankruptcy.

In short: The test compares your income to West Virginia’s median income. If your income is below the state median, you automatically qualify. If it’s above, you must pass a second step (deducting allowed expenses) to prove you cannot afford debt repayment.

2. Purpose of the Means Test#

The Means Test was designed to prevent "bankruptcy abuse"—situations where individuals with sufficient income file for Chapter 7 to avoid repaying debts they could afford. It protects creditors and ensures Chapter 7 is reserved for those in genuine financial hardship.

3. West Virginia Chapter 7 Income Limits (2024)#

The first step of the Means Test is comparing your average monthly income to West Virginia’s median household income (updated annually by the U.S. Trustee Program). As of April 2024, the median income for West Virginia households is:

Source: U.S. Trustee Program, 2024 Median Income Data for West Virginia

Note: "Household size" includes you, your spouse (even if not filing jointly), and dependents (e.g., children, elderly parents you support financially).

4. Calculating Your Income for the Means Test#

To determine if you pass the first step, you’ll need to calculate your average monthly income over the past 6 months (the "lookback period"). Here’s how:

Step 1: Gather All Income Sources#

Include income from:

• Wages/salary (before taxes)
• Self-employment earnings (after business expenses)
• Rental income
• Alimony or child support (if received)
• Pension or retirement distributions
• Side gigs (e.g., freelancing, gig work)

Exceptions: Do NOT include:

• Social Security benefits
• VA disability benefits
• Public assistance (e.g., SNAP, TANF)
• Child support paid to others

Step 2: Calculate Average Monthly Income#

Add up all income from the past 6 months, then divide by 6. For example:

• Total income (6 months): $20,000
• Average monthly income: $20,000 ÷ 6 =$3,333

Step 3: Compare to WV Median Income#

If your average monthly income is below or equal to West Virginia’s median for your household size, you pass the first step and are eligible for Chapter 7.

5. Deductions & Expenses: The "Second Step" of the Means Test#

If your income is above the state median, you must complete a second step: deducting allowed expenses to calculate your "disposable income." If your disposable income is low enough, you may still qualify.

What Expenses Are Allowed?#

The Means Test uses IRS national and local standards for essential expenses, including:

• Housing and utilities (based on West Virginia’s local standards)
• Food and household supplies
• Transportation (car payments, gas, insurance)
• Healthcare (insurance premiums, out-of-pocket costs)
• Childcare or dependent care
• Taxes (federal, state, FICA)
• Secured debt payments (e.g., mortgage, car loan)

Calculating Disposable Income#

After deducting these expenses from your average monthly income, you’ll get your "disposable income." The rules are:

• If disposable income is ≤ $130/month: You pass the Means Test.
• If disposable income is ≥ $240/month: You fail (you can afford to repay debts and must file Chapter 13 instead).
• If disposable income is between $130–$240/month: You must show you cannot repay at least 25% of your unsecured debt over 5 years.

6. Eligibility Steps for WV Chapter 7#

Follow these steps to determine if you qualify:

1. Determine your household size (include spouse, dependents).
2. Calculate your 6-month average income (include all sources except excluded benefits).
3. Compare to WV’s median income:
   • If below/equal: Eligible for Chapter 7.
   • If above: Proceed to expense deductions.
4. Calculate disposable income (income minus allowed expenses).
   • If ≤ $130/month: Eligible.
   • If ≥ $240/month: Ineligible (file Chapter 13).
   • If $130–$240/month: Prove you can’t repay 25% of unsecured debt over 5 years.

7. Common Mistakes to Avoid#

• Underreporting income: Omitting side gigs or rental income can lead to your case being dismissed.
• Miscalculating household size: Forgetting dependents may lower your median income threshold.
• Using outdated income limits: Median income is updated annually—check 2024 figures.
• Ignoring expense deductions: Even if income is above median, deductions may still make you eligible.
• Skipping credit counseling: You must complete a pre-filing credit counseling course (required by law).

8. FAQs About the WV Chapter 7 Means Test#

Q: What if I’m self-employed?#

A: Include net self-employment income (revenue minus business expenses) in your 6-month average.

Q: Can I include my spouse’s income if we’re not filing jointly?#

A: Yes—household size includes your spouse, even if they don’t file for bankruptcy.

Q: What if my income fluctuates (e.g., seasonal work)?#

A: Use the 6-month lookback period to average highs and lows. If income drops significantly after the lookback, you may still qualify.

Q: How often do West Virginia’s median income limits change?#

A: Annually, usually in April. Always check the U.S. Trustee Program’s website for updates.

9. Reference#

• U.S. Trustee Program: 2024 Median Income Data for West Virginia
• Bankruptcy Code: 11 U.S.C. § 707(b) (Means Test provisions)
• IRS Local Standards: West Virginia Expense Allowances

Disclaimer: This blog is for informational purposes only and does not constitute legal advice. Consult a West Virginia bankruptcy attorney to assess your unique situation.