Taking the bankruptcy means test is a critical step in filing for Chapter 7 bankruptcy because it determines if you’re eligible. The test clarifies whether your income surpasses a certain amount. In general, most people who take it pass the test, but failing doesn’t terminate your options. Today, Groce and DeArmon explains the importance of the bankruptcy means test and what happens if you pass or fail.
How Do I Complete the Means Test?
The bankruptcy means test can be an involved process, so it helps to work with a qualified attorney. First, gather documentation about your income and expenses over the past six months and bring it to your consultation. Your attorney will work with you to make sure your income and expenses are properly documented. Then, your bankruptcy attorney will complete the form and submit it to the court for review, along with the rest of your filing documents.
What Determines Whether I Pass or Fail?
The means test considers your income, expenses, and the size of your family to conclude if you have enough disposable income to pay off your consumer debts. You’re not required to pass the means test if your debt mostly comes from a business that you own.
The median household income for Missouri is $53,578. If your monthly income is less than or equal to this amount, you may qualify to file for chapter 7 bankruptcy. If it’s greater, things become more complicated.
If You Pass the Chapter 7 Means Test
If you pass the means test, the court will look at your income and expenses. After subtracting your monthly expenses from your current monthly income, do you have enough left over to repay some of your debt? If so, the court may switch your case to a Chapter 13 bankruptcy. If not, you’re able to file for Chapter 7 bankruptcy, which means that most of your unsecured debts (medical bills and credit card debt) will be forgiven.
If You Fail the Chapter 7 Means Test
If your income is too high and you fail the means test, remain optimistic. You might still be eligible to file for Chapter 13 bankruptcy to retain certain assets and begin repaying your debts.
However, before you decide on Chapter 13, talk to an attorney at Groce & DeArmon to examine your options. With our expert legal advice, you may discover that you can, in fact, pass the means test. Sometimes mistakes are made when taking the means test, so we’ll go over it thoroughly with you.
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If you’re thinking about filing for bankruptcy or if you failed the means test, contact Groce & DeArmon in Springfield, Missouri. We’ll discuss your options and advise you on how to resolve your debts. Also, when you’re ready to file, we’ll help guide you through each phase of the filing process. Contact us today to set up a free consultation.