Means Test for Filing Chapter 7 Bankruptcy
If you are in debt beyond your control and are considering filing for Chapter 7 Bankruptcy as a debt relief option, there is an important thing to consider, The Chapter 7 Bankruptcy means test. This Means Test will determine your eligibility for filing a Chapter 7 Bankruptcy. Prior to the latest bankruptcy legislation, almost anyone in financial trouble could file for Chapter 7 Bankruptcy. Now, if you want to file for Chapter 7 Bankruptcy you must first pass the Chapter 7 Bankruptcy means test before you can file. The Chapter 7 Bankruptcy means test determines whether or not you are eligible to file Chapter 7 through a variety of calculations. Ultimately, it determines if you’re financially able to make payments to your creditors in a Chapter 13 Bankruptcy as opposed to not making payments in a Chapter 7 Bankruptcy. If the person taking the Chapter 7 Bankruptcy means test does not have the means to repay their creditors according to the means test, they qualify for Chapter 7 bankruptcy.
If you think the Chapter 7 Bankruptcy means test will prevent you from filing Chapter 7, think again. Most people considering Chapter 7 bankruptcy have no trouble passing the means test. In fact, since the means testing was put in place, The Law Offices Of R.J.Atkinson has seen only a few instances where the means test prevented a client from filing for Chapter 7 Bankruptcy.
There are two basic parts to the Chapter 7 Bankruptcy Means Test. You will only have to pass one of these parts to be eligible to file for Chapter 7 Bankruptcy.
Means Test Part One: "Median Income"
This part of the Chapter 7 Bankruptcy Means Test is straight forward and a very simple. This part of the means test compares your average household income over the last six calendar months to the median income for your state, if your income is below the state median income; you qualify for Chapter 7 Liquidation under the Bankruptcy Code. If your household income is above the median, you have to pass part two of the means test.
Means Test Part Two: "Disposable Income"
This part of the Chapter 7 Bankruptcy the means test can become complicated, but for the most part it is also straight forward if you know your figures. Part two of the test deducts expenses from your income to determine how much you can pay towards your unsecured creditors over the next five years: for example if you lived in Houston, Texas, Harris County;
- If you can pay at least $10,000 ($167 per month), you can't file for Chapter 7.
- If you can pay at least $6,000 ($100 per month) and that is at least 25% of what you currently owe your unsecured creditors, you can't file for Chapter 7.
- If your disposable income is less than $100 per month, you can file for Chapter 7.
The means test has certain deductions which are standard allowances based on the number of vehicles you operate, the number of people in your household, and the cost of living in Houston, Texas, Harris County. Depending on which county you live in the amounts may change but the method of calculation will not.
In addition, to the standard deductions in the means test, you can also deduct the full amount of certain actual expenses such as mortgage and vehicle loan payments. The Chapter 7 Bankruptcy Means Test is isn’t a difficult or complicated as it was made to sound in the media. It is actually a fairly straightforward process unless you have issues beyond the median income for a household of your size. The calculations involved in the Chapter 7 Bankruptcy Means Test can be confusing if you don’t understand the terms used in the means test or if your situation is on the edge of qualifying for Chapter 7. In these types of situations, The Law Offices Of R.J.Atkinson can help you to understand the test and help you throughout the process.
Finding out if you are eligible to file for Chapter 7 Bankruptcy is easy.
If you want to take the Chapter 7 Bankruptcy Means Test, Click Here — Take the test!
If you have more questions about the Bankruptcy Means Test or filing for Chapter 7 personal bankruptcy please contact The Law Offices of R.J.Atkinson for a free initial consultation to discuss your bankruptcy options. Whether you live in Austin, Houston, Dallas, San Antonio, San Marcos, Waco, College Station, Bryan, Dennison, Round Rock, Georgetown, Plano, Garland, Irving, McKinney, Carrolton, Denton, Katy, Richardson, Sugarland, New Braunfels, Seguin, Humble, Boerne, Kerrville, Addison, Arlington, Victoria, Sherman, or most anywhere else in Texas, we can help you determine your eligibility to file for Chapter 7 Bankruptcy with the Bankruptcy Means Test.
Call Texas Bankruptcy Lawyer R.J.Atkinson: 800-436-9056