Means Test

• A Maryland debtor must pass the means test before he can file for Chapter 7 bankruptcy. During the means test, the debtor compares his family income with the median family income for a family of the same size in Maryland. According to the Census Bureau, Maryland's median incomes as of 2010 were $54,874 for a single earner; $73,291 for a family of two; $85,746 for a family of three; and $101,693 for a family of four. Add $7,500 for each family member in excess of four.
  
  

Median Income

• If the debtor's family income is less than Maryland's median family income, the debtor can file for Chapter 7 bankruptcy. If the debtor's family income is more than Maryland's median family income, the debtor needs to calculate his monthly disposable income to figure out if he qualifies for Chapter 7 bankruptcy. The debtor calculates his monthly disposable income by deducting his allowable monthly expenses from his monthly income.
  
  

Disposable Income

• If the debtor's monthly disposable income is less than $100, he can file for Chapter 7 bankruptcy. If the debtor's monthly disposable income is more than $100, but that amount would not pay at least 25 percent of his debts over the next 60 months, he can file for Chapter 7 bankruptcy. If the debtor's monthly disposable income is more than $100, and that amount would pay 25 percent of his debts over the next 60 months, he cannot file for Chapter 7 bankruptcy. If the debtor files for Chapter 7 bankruptcy, a bankruptcy trustee will sell his property and use the proceeds of the sale to pay the debtor's creditors.
  
  

Chapter 13

• If the debtor does not qualify for Chapter 7 bankruptcy, he can file for Chapter 13 bankruptcy. Chapter 13 bankruptcy entails the debtor's entering a debt repayment plan under which he repays his creditors over three or five years. The debtor determines the applicable commitment period for the debt repayment plan by taking the means test. If the debtor's family income is less than Maryland's median family income for a family of the same size, his debt repayment plan lasts for three years. If the debtor's family income is more than Maryland's median family income for a family of the same size, his debt repayment plan lasts for five years. A bankruptcy trustee will take the debtor's monthly plan payments and distribute them to each of the debtor's creditors.