Chapter & Bankruptcy: the Means Test
Skilled Orlando Bankruptcy Lawyer
In order to determine which debtors are truly not able to pay back some,
or all, of their debt, Congress enacted laws to requiring consumer debtor(s)
to pass a "Means Test" before they can be presumed to qualify for
Chapter 7 bankruptcy. (This type of
bankruptcy allows for a quicker and less costly process to discharge debts, but also
may require the debtor to lose some assets, if the assets exceed what
they are allowed to keep pursuant to the law in that jurisdiction.) The
Means Test requires that the debtor's monthly income is compared to
the state median income level for the specific household size of the debtor.
If the debtor's income is below the state median, the individual passes
the test. If it is above the state median, the debtor goes on to round
two of the test; seeing if the debtor's disposable income is below
a certain amount. (The debtor's disposable income is the hypothetical
amount of income left over after the debtor pays certain "allowed"
monthly bills.) If the debtor's disposable income exceeds the limit
that is set, he or she may instead have to consider
Chapter 13 bankruptcy (the "wage earner plan").
For some individuals, the means test can get very complex. Our Orlando
bankruptcy attorneys at Richard A. Heller, P.A. can take you through the
Mean's Test and help you ensure that you are properly assessing your
Chapter 7 bankruptcy eligibility. We have more than six decades of combined
legal experience, so don't hesitate to reach out to us for assistance!
Helping You Find the Best Solution
So, if you pass the means test, does that means should file for Chapter
7 bankruptcy? Not necessarily. There may be some individuals who have
financial circumstances that make this type of bankruptcy more harmful
than beneficial. Even if you qualify for Chapter 7 bankruptcy, you could
end up finding that Chapter 13 is actually a safer or more effective debt
relief solution for you. It is important that you discuss you financial
situation and goals with a qualified lawyer before deciding what your
next move will be.
Contact our firm so we can help you see if filing for Chapter 7 bankruptcy is the right