Am I Eligible to File for Bankruptcy?
Most individuals looking to file for bankruptcy will be asked to take an evaluative means test. This test simply determines whether or not your income is low enough for you to file for a Chapter 7 Bankruptcy. If your income is determined to be too high to file under Chapter 7 , you may choose to file under Chapter 13 bankruptcy. The means test uses a specific formula to generate the outcome and determine if you are eligible. This test was put into place to help those who absolutely cannot pay back any of their debts and to limits those with high incomes from filing for a Chapter 7 . The means test determines your “disposable income”, or the amount of money which is left over after expenses have been paid. If your disposable income is low, you may be eligible for a Chapter 7 Bankruptcy. These tests are available online.
I passed the means test, where do I go from here?
Passing the means test means that you are eligible to file under Chapter 7 for bankruptcy. This does not mean that you should file, it simply means that you are eligible to file. Filing for bankruptcy should always be a last option, not a solution to a financial problem that can be paid off. If you are eligible and are considering bankruptcy, there are alternatives to you declaring yourself unable to pay off your debt. You should also discuss what legal actions you may wish to take with an attorney at our law firm. If you have exhausted all causes and the only other choice you may have is bankruptcy, know that you will soon be free from pestering calls, debt collectors and stress of knowing that you cannot afford to pay off your debts.
What do I do if I did not pass the means test?
If the test was failed, you are now limited to using a Chapter 13 bankruptcy if you do wish to file. If you file under Chapter 13, you will be placed on a court approved payment plan and gradually pay off your debt with the disposable income that was determined by the test. The good news is that Chapter 13 does allow you to keep most of your non-exempt and exempt property from being liquidated to help pay off your debts. Chapter 13 is also the better alternative to those who have high mortgages or student loans. If you did fail the means test and still prefer to file under Chapter 7 for bankruptcy, contacting an attorney may help you pass the test.