Before a bankruptcy case can move forward, a detailed evaluation of your finances and debt must take place. Your income, assets, and expenses will be evaluated to determine which Chapter of the bankruptcy code you should file. If you file a Chapter 7 bankruptcy, you will need to pass the means test. Passing this test is required by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005.
By looking at your unique financial situation, your attorney will help you determine if you will qualify to file a Chapter 7 bankruptcy or Chapter 13 bankruptcy will better fit your situation.
Your States Median Income
Your states median income can be seen at U.S. Census website: www.census.gov. If your income is lower than the state’s median, you will be eligible to file for Chapter 7 bankruptcy. If individuals have a monthly income above the states median income, then the law assumes they have enough income to repay their debt. These filers will have to file Chapter 13 bankruptcy instead.
When calculating your income, your living expenses will be established by using the IRS approved schedules for tax calculation and collection.
If you would like to file a Chapter 7 bankruptcy and worry that you might not pass the means test, contact a Rio Grande bankruptcy attorney to discuss what options you may have.