What is the Means Test?
The Bankruptcy Means Test
Chapter 7 Are the two main options for personal bankruptcy.
Under Chapter 7 you are able to discharge most of your debt and get a "fresh start."
You may have a preference for one or the other based on your personal circumstances. Congress has placed limits on your ability to choose, however.
Under heavy lobbying from credit card companies and other lenders, Congress enacted the "Bankruptcy Abuse Prevention and Consumer Protection Act of 2005." Some felt that bankruptcy was being abused by people who really could pay their debts to get out of paying.
The Act doesn't foreclose filing for bankruptcy in many cases, but it does make it more complicated.
Debt Relief Starts Here
The Means Test is one of the "hoops" you must now jump through. We can give you a boost.
Only people who can't pay a significant portion of their debt are allowed to file under Chapter 7. In order to do so, you must have income low enough, or debts high enough, to show this.
First you must determine if your income is below the median for households the same size as yours in your state. If it is higher you proceed to the second step. This involves comparing your monthly living expenses with your monthly income. Assuming you have something left over at the end of the month, multiply that by 60.
Say, for example, that you have $100 left each month. Multiplying that by 60 months = $6,000. Had the total been $10,000, you would have been automatically denied Chapter 7.
In the above example you are not automatically disqualified; however, you must now look at your debt. Say your total debt were $100,000. The $6,000 from above is only 6% of $100,000.
If the figure is 25% of your total debt, then you may still qualify for Chapter 7. In our example, you could not pay 25% of your debt over five years.
If you need help saving your home or filing for bankruptcy, we are here to help. Contact a West Palm Beach bankruptcy attorney today online or by telephone at 561-801-6453 to speak with a knowledgeable South Florida and West Palm Beach loan modification lawyer. We are available 24/7 to discuss your debt problems and to help you pursue a fresh financial start.
