Do you qualify to file for Chapter 7 relief? Get Means Tested and find out.
The “new” bankruptcy law of 2005 added a whole new dimension to the process of qualifying for bankruptcy relief. Before the change, a Chapter 7 case filed by a person with primarily “consumer debts” could be dismissed where the court found that granting relief under chapter 7 would be an abuse of the law. This standard still applies but is general in nature—i.e., whether the debtor can afford to pay back a significant amount of his or her debts over time.
The amended law now also provides that the court will presume than an abuse exists where the debtor is subject to and fails what has become known as the “Means Test.” The formula used in the law is complex, and the income standards and limitations are adjusted over time according to income and expense tables that are found in other parts of Federal law.
When we “Means Test” you, we start with your current monthly income. Then we subtract a combination of real and hypothetical living expenses. Under the rules, this tells us if you have enough “projected disposable income” to pay some of your debts. In cases where you may fail this test, it may still be possible to get relief if “special circumstances” apply. And you may also wish to discuss your options under a Chapter 13 repayment plan at the same time that you are Means Tested.
If you’d like to have your income and expenses tested to see whether you still qualify to file Chapter 7 bankruptcy, call us to set up a simple appointment where we’ll do an analysis and show you how these rules apply to you.
And if you are worried about whether the Means Test will prevent you from filing Chapter 7, please remember a couple of things. First, it’s good to be earning money! We are very pleased when our clients are earning good money, especially after periods of extended unemployment or similar problems. Second, the Means Test rules look at your income in the last 6 months, so you should talk to a Certified Expert in bankruptcy law as soon as possible to see how the rules will affect your case. If you think you need to file bankruptcy, the Means Test may very well affect “when” you may file. Don’t let the passage of time block your right to relief in Chapter 7.