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The Chapter 7 Means Test

The Chapter 7 Means Test


The Chapter 7 bankruptcy means test determines whether your income is low enough to file Chapter 7 bankruptcy. Take the time to understand how bankruptcy works in your state. Do this by consulting with an experienced attorney first before you choose to file. This can help to eliminate many of the common questions associated with filing for Chapter 7 bankruptcy in your location.

Those with a high income who fail the means test for Chapter 7 bankruptcy may use Chapter 13 bankruptcy to pay back some of their debts. This is because Chapter 7 will not eliminate their debts completely. Taking a Chapter 7 means test does not require you to be without access to assets or income in order to make use of the bankruptcy benefits. You can still earn an income and qualify for bankruptcy if you have a significant amount of expenses. Examples of expenses include car loan payments, taxes or a costly mortgage payment.

Purpose of the Means Test

The means test exists so that not everyone can file for Chapter 7 or take advantage of that process.

The means test was created to ensure those using Chapter 7 bankruptcy truly are unable to pay their debt. Your expenses and monthly income are analyzed over the previous six months prior to filing for bankruptcy.

Only those filer’s with consumer debts rather than business debts have to take the means test. You have to determine whether or not the income you make is in line with the median in your state.

In the event that you earn more than your state’s median income, you have to determine whether or not you have funds left after expenses to pay back a portion of your debt. For those with a household income that exceeds their state’s medians, the means test computations are more complicated.

6)How to find the best bankruptcy attorney.

Is Chapter 13 Right for Me?

Determine whether you have enough disposable income after paying off your monthly expenses to make use of Chapter 13 bankruptcy. Bear in mind that median income levels will be different for each state. It’s recommended to use an online calculator to determine your Chapter 7 means ability, before consulting with a bankruptcy attorney. Bankruptcy laws can be different in every single state so having an attorney you trust can help you significantly.

Income Information

You will need to provide some basic information about your income as well as your expenses. In the event that you pass a Chapter 7 means test, this does not always mean that you should go forward for Chapter 7 bankruptcy. Rather, it simply means that you are eligible to file for Chapter 7 bankruptcy.

Sitting down with an experienced attorney can help you determine whether or not it makes sense to file for bankruptcy. If you do not pass a Chapter 7 means test, you may be eligible to file for Chapter 13 bankruptcy which mandates that you pay monthly over an up to a 5-year period in accordance with a budget that will be overseen by the court. In either situation, having all of the facts well in advance and making an informed decision about your future can be extremely beneficial. A bankruptcy attorney who has helped others walk through this process before can help.  

How To Find The Best Bankruptcy Attorney

Filing for bankruptcy is already a frustrating endeavor, you will want to make sure that you find an experienced attorney who can help you sort your filing status out and determine which bankruptcy is the best fit for you. At Bankruptcy Expert we provide you with the best possible option through our network of Bankruptcy Attornies and can help you locate a qualified bankruptcy attorney near you.

You will want an attorney who understand the filing process for each type of bankruptcy and who is also compassionate about your situation and needs. The latter will work closely with you and ensure that your filing is personal and specific for your needs.  Call our contact us today to get the best help possible.