What is the Means Test for Chapter 7 Bankruptcy?

What is the Means Test for Chapter 7 Bankruptcy?

Are you thinking about filing for bankruptcy but do not know whether you qualify? A bankruptcy lawyer can help.

Did you know that in order to file for bankruptcy, you have to qualify? What is more, did you know that there are different types of bankruptcy, and that each one has its own qualification test? In order to file for Chapter 7 bankruptcy, one of the most common types of bankruptcy filed by individuals, a person must pass the means test first. Here is an overview of what the means test is and how an attorney can help you to navigate the means test and understand your options for filing.

What is the Bankruptcy Means Test?

The bankruptcy means test is a test that is used to determine your means - your income and assets. If a person has too great of means, they are barred from filing for a Chapter 7 bankruptcy and instead will need to file for a Chapter 13 bankruptcy. While having a household income that is below your state’s median income is one way to qualify for the means test, determining your total household income can be complicated. There are other ways to pass the means test even if your household income is more than the state’s median income.

How an Attorney can Help You Navigate the Chapter 7 Means Test

If you are thinking about filing for bankruptcy, working with an attorney is a smart idea. Your attorney can help you to understand the Chapter 7 means test and what you need to do to pass it. The following is an overview of the type of support that a lawyer will provide related to a Chapter 7 bankruptcy and the means test:

  • Explaining the means test and how to pass. The first thing that your lawyer will do is explain the means test, what it is and why it matters, and how a person passes the means test. Your attorney will also provide you with information about other bankruptcy filing alternatives if you do not pass the means test.

  • Gathering and reviewing financial documentation. In order to determine whether or not you pass the means test, you will need to gather all of your financial information, specifically as it relates to your income and assets. An attorney will give you a list of what documentation you need to collect, and then will review it thoroughly on your behalf.

  • Calculating expenses. Perhaps even more complicated than assessing your income and assets is correctly calculating your expenses. This is an important part of the process because allowable expenses, things like money towards rent and groceries, help to determine the total amount of money you have left to put toward paying off your debt. If you have too much money after your allowable expenses, you might not be allowed to file for Chapter 7 bankruptcy.

  • Starting the filing process; going through bankruptcy counseling. Once your attorney has reviewed your financial documents, he or she can tell you whether or not you qualify for a Chapter 7 bankruptcy. Note that in some cases, a Chapter 13 bankruptcy may be more advantageous - something your attorney can recommend after reviewing your situation. Next, your attorney can prepare your bankruptcy filing documents and help you to sign up for credit/bankruptcy counseling, which is required.

Call Tadross Law Today

For help understanding the means test and other elements of a bankruptcy filing, please call the experienced bankruptcy lawyer at the law firm of Tadross Law today at (267) 296-9300. Our firm is here to serve you.

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