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Chapter 7 Bankruptcy Means Test Explained

Posted on : June 9, 2016
Tacoma Bankruptcy Lawyer

Filing for bankruptcy can be a complex, overwhelming process. There are many different bankruptcy options, however, not all individuals and families are eligible for all types of bankruptcy. A Chapter 7 bankruptcy is designed for people with a lower income and without a lot of assets that they want to keep. In order to qualify for a Chapter 7 bankruptcy, you must first pass the means test.

Automatic Qualification

In some cases, an individual or a family may qualify automatically for a Chapter 7 bankruptcy. If your household income is less than the median income for a family of your size in your area, you qualify and do not have to actually go through the process of completing the means test.

What to Do If Your Income Surpasses the State Median

If you have a higher income than the state median income for your size family in your state, you’ll need to go through some more complex calculations to determine if you are eligible to file a Chapter 7 bankruptcy. Your disposable income will need to be calculated, meaning you’ll have to determine how much money you have left to pay your bills after paying necessary expenses like housing and child care. If you exceed the limits for disposable income for a Chapter 7 bankruptcy, you will not qualify and will need to file for a Chapter 13 bankruptcy.

Benefits of Filing a Chapter 7 Bankruptcy

If you have a lot of unsecured debts that you are having difficulty paying, such as medical bills and credit card debt, a Chapter 7 bankruptcy may be the best option for you. Often, after any non-exempt assets are liquidated, any remaining unsecured debts will be “discharged,” meaning you no longer owe the debt. For individuals with a lot of secured debt that cannot be discharged, such as tax debt and student loans, a Chapter 13 bankruptcy may be a more viable option.

Contact the Beecher & Conniff Law Office Today

If you are struggling to pay your bills and have questions about how bankruptcy may be able to provide you with debt relief and put you on a clean financial slate, don’t hesitate to contact the Beecher & Conniff Law Office. We are a team of experienced bankruptcy lawyers who can assist you in exploring all of the options available to you so you can gain control over your financial future. Call today for a consultation to discuss your unique needs at 253-627-0132. We are here to help you.

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