Understanding the Bankruptcy Means Test

If you are considering the option to file for bankruptcy it could be a wise idea for you to check into the bankruptcy means test. A bankruptcy means test is one of the easiest ways that you can choose the best type of personal bankruptcy that will serve your current debt situation.

With a Chapter 7 bankruptcy, you could face an advantageous situation if you are living with a limited income. A Chapter 13 bankruptcy could help you to utilize your disposable income on a debt repayment plan while protecting your assets and forgiving some of your debt. In order to determine which option would work best for you here is how a bankruptcy means test would work:

Comparing income:

 

The first step in bankruptcy means test involves checking your household income versus the household income for your area. If you are household income falls below the average for the area you will likely qualify for Chapter 7 filings.

If your household income is determined to be on average or above average for the area you will need to gather information about your allowable expenses over the last six months. Checking into paying down your allowable expenses and looking into new disposable income that you would have access to could help you to reasonably pay off some of your debt and file for bankruptcy via Chapter 13.

If you are really hoping to file for Chapter 7 bankruptcy keep in mind that the bankruptcy means test is something that you can take every six months after your initial attempt. Waiting six months of taking the test again could ensure that you qualify for Chapter 7 bankruptcy if your income dips below area averages.

This post was written by Trey Wright, a bankruptcy lawyer in Tallahassee. Trey is one of the founding partners of Bruner Wright, P.A. Attorneys at Law, which specializes in areas related to bankruptcy law, estate planning, and business litigation.

 

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