When filing for Chapter 7 bankruptcy in Texas you are required to take a means test in order to be able to discharge your debts using bankruptcy. With exception of course, to Veterans who are exempt from a means test if the debt was incurred while on active duty. A means test is essentially a calculator for all your assets, liabilities, and income and is used to “qualify” debtors to have their debt eliminated in this manner. In order to “pass” the means test, your expenses and debts must be more than you can afford to pay back. If the court determines you CAN afford to pay back some of your debts, you must file for Chapter 13 bankruptcy instead.
Chapter 7 Bankruptcy Texas Means Test
The means test was instituted to more closely scrutinize bankruptcy filings in order to ensure creditors get back some money, and in the process, made it more difficult to get a complete discharge. The Chapter 7 means test calculation is fairly simple but can get complicated when considering others factors of your bankruptcy. The components of the Chapter 7 means test include your average income over the previous six months minus expenses, compared to your expenses and require payments. Alternatively, with a Chapter 13 Bankruptcy, you will be required to pay back some of your creditors, what you can afford.
Texas Median Income Comparison
Your Chapter 7 bankruptcy means test results are then compared to the latest household median income figures, which can be found at the US Bankruptcy Means Testing page. When compared to the Texas median income, if your household income exceeds it then you must wait until your income is lower or choose to file for Chapter 13 bankruptcy instead. This may be in your interest if you are attempting to stop a foreclosure for example.
Contact a Houston bankruptcy attorney for more information about how to file out your means test forms and how to include all your unique information.