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In a Chapter 7 case, the court will determine whether you are eligible to have your obligations discharged under the Chapter 7 statute. The means test is the term for this qualifying metric. Your assets, income, and debts are all factored into the means test. Your income and assets are assessed using the Chapter 7 means test. The court uses the means test to establish whether you have the financial means to repay all or part of your debt. If you qualify for a Chapter 7 bankruptcy, you may be able to repay your debts by making payments based on your disposable income or by liquidating nonexempt assets.
The court looks at your income to debt ratio in a Chapter 13 case. To put it another way, do you have enough money to pay off some or all of your debts? Based on your remaining discretionary income, this assessment will determine a payback plan. A Chapter 13 plan has the advantage of allowing you to spread out your debt payments over three to five years. As a result, all nonexempt assets, such as your home and automobile, are protected.
It’s vital to note that some debts aren’t dischargeable under a Chapter 7 or 13 bankruptcy. The bankruptcy code considers these “priority debts” to be needed for repayment. Alimony, child support, fraudulent debts, and criminal restitution payments are all instances of debts that are not eligible for discharge. In addition, some tax bills and student loan debts may not be dischargeable in bankruptcy.
If you are considering bankruptcy, speak to one of our Hidalgo County bankruptcy lawyers about your debts to ensure you obtain the best outcome in your case filing. We have helped thousands of people eliminate their debt and regain financial freedom.