One of the main concerns is when people want to file bankruptcy, whether they will pass the “means test” to qualify for a Chapter 7 bankruptcy. All consumers filing for bankruptcy protection must be able to pass this requirement.
Means Test
The Chapter 7 means test qualification uses your average income from the last six months before filing bankruptcy and compares that with the median income of the state that you live in. The size of your family and the region you live in also plays a part in determining if you will pass the means test.
Congress added the additional requirement of the means test to make it more difficult for people to discharge their debt without paying creditors. Those that earn at or below the state’s median income can file Chapter 7 bankruptcy and can have the majority of their debt eliminated.
Chapter 7
You may still be able to file Chapter 7 bankruptcy even if your income is higher than your state’s median income. To figure out if you qualify, the courts will look at your income, monthly expenses, and household size. The courts will calculate if you have any money left over to pay your creditors. If it is determined that you have enough money to pay your creditors, you can file Chapter 13 bankruptcy instead.
You do not have to be broke to pass the means test, and you can still have an income and assets. Speaking to a Rio Grande bankruptcy attorney will help you understand your financial situation and how you can get relief from your debt.