The bankruptcy means test is an attempt to make chapter 7 available to only those debtors who absolutely need to file a chapter 7 bankruptcy. Do You Qualify?
When most people think of bankruptcy, they think in terms of Chapter 7, where unsecured debts are normally discharged in full. Bankruptcy of any variety is a difficult ordeal to have the go thru, but at least with Chapter 7, a debtor was able to wipe out their debts in full and get a fresh start with their finances.
If you're in a difficult financial situation and you feel that you will need to file for bankruptcy, then it's important that you know about the means test (or chapter 13 means test).
This is a test that determines whether or not you actually can or cannot pay off your debts. This test takes your income and your expenses into account to make the say on whether or not you can file for bankruptcy.
Before you go ahead and file for bankruptcy, you will need to calculate your income as well as you expenses and make sure that that your income is below your expenses. This also means that you have to factor in the debt payments and interest charges that are being added. To the courts, you have to have a good reason to file for bankruptcy.
So what happens if you don't pass the bankruptcy means test?
In this case, filing for bankruptcy cannot be expedited and you need to go through a long process to provide the evidence that you need to file for it. To prevent this from happening, you can take a simple test to figure out If you can file.
All you need to do is to use a bankruptcy means test calculator. One of the factors for the chapter 7 bankruptcy is to determine how your income compares to the median income in your state. You have to start by calculating the number of people in your household and then going through a process to compute your monthly income and expenses.
The calculator requires you to fill out a lot of information and you will need your tax and financial information to complete it. However, it's better to take the extra time out to do this first before filing. This calculator will allow you to see if you can go through the bankruptcy process without any problems with the court.
In addition to the means test, you should hire an attorney so he can help you through the process and avoid any obstacles. An attorney will also be educated on the latest new bankruptcy laws and all the other details that come with filing.
Although it may seem like an additional expense, you will be saving a lot of time and money by doing things right the first time around.
To sum up, it's important that you use a calculator to see if you would pass the bankruptcy means test. If you file without knowing your status and find out that you don't qualify, it will make it even harder to file even when you are in a difficult situation.
Whether you pass or fail, you should get the help of an attorney to walk you through the whole process so that you can deal with lenders and address anything that may disqualify you.
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