Meeting the Requirements to Permanently Rid Yourself of Debt
When you’re struggling to meet your personal financial obligations, there are two types of bankruptcy filings that may be open to you: the permanent discharge of debt under Chapter 7, and the restructuring or reorganization of debt under Chapter 13. Under current law, you must qualify to file a petition under Chapter 7 by submitting to a “means test,” whereby you demonstrate to the bankruptcy court that you lack the income and/or resources to repay your creditors over a specific period of time, typically three-to-five years.
How Does the Means Test Work?
The means test looks at your financial condition and assesses the likelihood that you can get back on your feet without permanently ridding yourself of certain debt. It considers your income and expenses, as well as your family size, calculating whether you have enough disposable income to meet certain minimum standards of living and repay your creditors.
The means test is generally a two-step process:
- A review of your household income—The court will first look at your income for the six months immediately preceding the filing of your bankruptcy petition. If your average monthly income for that period falls below the median income in your state, you automatically qualify to file for protection under Chapter 7.
- A review of your expenses over the last six months—You may still qualify to file under Chapter 7, even if your average income exceeds the median income. The court will evaluate all your “allowable expenses” during that time period, such as housing, food, medical bills and clothing. Whatever is left will be considered your “disposable income.” If your disposable income is below certain standards, you may still qualify to discharge debts through Chapter 7.
Contact an Experienced Rockwall, TX Bankruptcy Attorney
At the Law Offices of Carrie Weir, all potential clients are entitled to a free initial consultation. To arrange an appointment, contact my office online or call 972-772-3083. I handle Texas personal bankruptcy filings in Kaufman County, Rockwall County, Collin County, Dallas County, Hunt County and the surrounding counties.
