Understanding the Bankruptcy Means Test and Who Qualifies for Chapter 7 in New Mexico
How Jason Cline Began Helping New Mexicans Find Financial Relief
Jason began working in bankruptcy law over two decades ago. What started as a temporary job turned into a lifelong passion for helping people through financial hardship. After attending law school, he opened his own firm and has since focused on guiding clients through bankruptcy with compassion and clarity.
Although leaving a stable paycheck to start his own practice was daunting, Jason says it was the right move — one that allowed him to truly make a difference in people’s lives.Jason began working in bankruptcy law over two decades ago. What started as a temporary job turned into a lifelong passion for helping people through financial hardship. After attending law school, he opened his own firm and has since focused on guiding clients through bankruptcy with compassion and clarity.
What Is the Bankruptcy Means Test?
The bankruptcy means test was added to U.S. bankruptcy law in 2005. It determines whether someone qualifies for Chapter 7 bankruptcy based on their income and living expenses.What Is the Bankruptcy Means Test?
Jason explains that the test looks at a person’s last six months of income, calculates a monthly average, multiplies it by 12, and compares it to the median income level in New Mexico.
If the person’s income is above the median, the test continues to a second stage that considers actual and IRS-standard living expenses. If the remaining disposable income is less than $100 — or if the amount would pay less than 25% of unsecured debts — the individual can still qualify for Chapter 7. Otherwise, they may need to file under Chapter 13.
Why Congress Created the Means Test
Congress introduced the means test to prevent misuse of bankruptcy and to bring fairness to the system. According to Jason, it was designed to address cases where people have fluctuating or seasonal income.
For example, landscapers or construction workers might earn high wages during the summer but much less in the winter. By averaging income over six months, the law aims to give a more accurate view of someone’s financial situation.
However, Jason notes that the process isn’t perfect — timing can make income appear artificially high or low depending on when the case is filed.
How Attorneys Determine Chapter 7 Eligibility
When meeting with new clients, Jason begins with a preliminary income calculation based on household size. If the client’s income falls below the median, Chapter 7 is typically available.
If it’s above, he gathers more detailed information — including pay stubs, dependents, and key expenses — to see whether the individual can still qualify after deductions. This step ensures that clients understand all their options before filing.
Common Misconceptions About the Means Test in New Mexico
Many New Mexicans assume that earning above the median income automatically disqualifies them from Chapter 7. Jason clarifies that this is not true. With proper documentation and accurate expense reporting, many still qualify.
Another common misunderstanding involves married couples. Some believe that filing alone means they can exclude their spouse’s income — but household income must always be reported, even if only one spouse files.
Why It’s Important to Get Professional Guidance
According to Jason, many people turn to Google for bankruptcy information, which often leads to confusion. Online forums are filled with myths and worst-case stories that don’t reflect reality.
Speaking directly with a bankruptcy attorney provides clarity, accurate calculations, and peace of mind — something the internet can’t offer.
What Happens If Someone Doesn’t Qualify for Chapter 7?
If the means test shows disposable monthly income after expenses, the individual may need to file under Chapter 13 bankruptcy.
In this case, that disposable amount becomes the monthly payment made to unsecured creditors over a five-year period. After those five years, remaining eligible debts are discharged — giving clients the same debt relief outcome as Chapter 7, just over a longer timeframe.
Why It’s Important to Know Your Eligibility Early
Determining whether someone qualifies for Chapter 7 or Chapter 13 early in the process is crucial. Chapter 7 cases are faster and simpler, often completed in less than four months, while Chapter 13 involves a five-year repayment plan.
Jason emphasizes that clarity upfront helps clients prepare mentally and financially for what lies ahead.
Encouragement for Those Hesitant to Seek Help
Jason reminds listeners that bankruptcy exists to give people a fresh start. It’s a legal right designed for “honest but unfortunate” individuals facing overwhelming debt.
Filing can immediately stop harassing phone calls, repossessions, and foreclosures — lifting a huge emotional burden. He encourages anyone struggling with debt not to feel embarrassed about asking for help. Conversations with a bankruptcy attorney are completely confidential and judgment-free.
Start Your Fresh Start with Jason Cline
For New Mexico residents wondering whether they qualify for Chapter 7 or seeking answers about debt relief, visit AttorneyJasonCline.com to schedule a consultation.
You don’t have to face financial hardship alone. There’s always a way forward.
