Transparent.
Personable.
MEANS TEST
Helping Clients Navigate Bankruptcy Means Tests
Dealing with overwhelming debt can be incredibly stressful, and for some, filing for bankruptcy becomes a viable option to get a fresh start. However, before deciding on a bankruptcy chapter, debtors must first navigate the bankruptcy means test, a critical aspect of the process.
The bankruptcy means test was introduced as part of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA). Its primary purpose is to assess a debtor's financial situation and determine their eligibility for Chapter 7 bankruptcy. Chapter 7 is a liquidation bankruptcy that discharges most unsecured debts, offering a relatively swift and comprehensive debt relief. However, not everyone can qualify for Chapter 7 bankruptcy due to the means test.
Step-by-Step Guide to the Bankruptcy Means Test
The means test involves two steps:
1. Comparing Income to State Median: Initially, debtors must compare their average monthly income over the six months before filing bankruptcy to the median income for a household of their size in their state. If their income is below the median, they automatically qualify for Chapter 7 bankruptcy.
2. Calculating Disposable Income: Debtors whose income exceeds the state median must proceed to the second step, which involves calculating their disposable income. This is done by deducting certain allowable expenses, based on IRS standards, from their monthly income. The resulting disposable income is then used to determine if the debtor can afford to repay some of their debts through a Chapter 13 repayment plan.
Qualifying for Chapter 7 Bankruptcy
If the debtor's disposable income falls below a certain threshold, they pass the means test and are eligible to file for Chapter 7 bankruptcy. However, if their disposable income exceeds the threshold, they may be required to consider Chapter 13 bankruptcy instead.
Exploring Chapter 13 Bankruptcy as an Alternative
For debtors whose income is above the Chapter 7 threshold, Chapter 13 bankruptcy may still offer a viable solution. In Chapter 13, debtors propose a repayment plan to repay their debts over three to five years. While it requires a longer commitment, it allows debtors to retain their assets and catch up on overdue payments, such as mortgage arrears.
Understanding Means Test Exemptions and Considerations
Certain debtors may be exempt from the means test, such as disabled veterans or those whose debts are primarily non-consumer debts. Additionally, if the majority of a debtor's debts are not consumer debts, they may not need to undergo the means test.
Choose Compassionate Counsel for Your Bankruptcy Needs
Bankruptcy is a complex legal process that can be confusing and overwhelming. With so much at stake and many questions to be answered, you need a bankruptcy attorney who can help you through each step of the process. At Compassionate Counsel, we have been helping clients through the bankruptcy process for over 20 years, and we can help you, too.
At our firm, we understand that bankruptcy is often the last resort for people who have tried to solve their debt problems through other means. We will work with you to determine if bankruptcy is the right option for you and what kind of bankruptcy is best for your situation.
If you are considering Chapter 7 Bankruptcy in Scottsdale, contact us online or call (623) 294-5705 for a free consultation with our dedicated team.
Ready to Help You Achieve Your
American Dream
I can work with you to reunite your family, change your immigration status, become an American citizen, or hire a foreign worker. We provide diligent, competent, and zealous representation to each client by being proactive, responsive, and accessible. You will have direct access to me every step of the way. We are ready to answer questions or address concerns whenever they should arise.
Above all, my priority is to protect your American Dream. As we walk with you through the immigration process, you will find peace of mind knowing that you have a strong and determined advocate by your side. Whatever your goals may be, know that you are one step closer to achieving them by retaining me as your partner.
Don’t Leave Your Immigration Matters to Chance
Every year, millions of people immigrate to America to live, work, or enjoy being an American citizen. Whether you are seeking a better life for you or your family, or you are looking for a new business opportunity, you need an attorney who thoroughly understands the complexities of the immigration process. That’s where I come in.
As a first-generation immigrant, I understand your circumstance. The immigration process is scary, uncertain, and frustrating. That’s why determination and dedication are not enough to succeed. You need an attorney who is knowledgeable, experienced, and has a proven track record of success. With 15 years of experience and 1,000 cases successfully solved, I know how to win and protect your dreams of being in America. From deportation defense to visa petitions, green card applications to naturalization, I work tirelessly to fight for you against all immigration matters you might be facing.
“He Went the Extra Mile”
- Walter
Call 623-294-5705 or fill out the form below to schedule your free consultation.