Understanding The Bankruptcy Means Test
The Chapter of the Bankruptcy Code under which you may qualify for filing has changed over the years. In 2005, the Bankruptcy Abuse Prevention and Consumer Protection Act was passed, also known as BAPCPA. This changed the Bankruptcy Code to include a means test. This test is based on many factors and is used to determine whether or not an individual qualifies for bankruptcy relief under Chapter 7 or if an individual can repay some of his or her debt under Chapter 13.
Are You Eligible For Bankruptcy?
However, the bankruptcy means test is not just a matter of plugging in numbers. It requires careful calculations and a thorough analysis of your financial situation. At the offices of Lee Norton Bain, Attorney at Law, I represent Texas clients in all types of consumer bankruptcy matters. If you need your bankruptcy questions answered, contact my Georgetown law office for a consultation.
The first part of the bankruptcy means test is to take your monthly income from all available sources and then determine whether any of your income might be excluded from the income calculations. Once your current monthly income (CMI) is determined, it must be compared to the median income for the area in which you reside. If you meet this threshold, I can then help you determine which chapter of bankruptcy would be most appropriate for your situation and needs.
If you do not meet the median income criterion, your income may be adjusted to reflect your disposable monthly income after allowable deductions are made in various categories of expense. These expense deductions are formulated from published information compiled by the IRS, the Census Bureau and a wide variety of additional federal agencies. I can help you assess which deductions you may be eligible to use.
Can I File For Chapter 7 Bankruptcy?
Finally, I will measure to see if you have the ability to pay at least 25 percent of your unsecured debts over a five-year period. If so, then you are eligible for Chapter 13 protection. Filing Chapter 7 bankruptcy when you have the ability to pay at least 25 percent of your unsecured debts is presumed to be an abuse of the bankruptcy system and can result in serious consequences. I can help you avoid that.
It is also possible that, even if you do not have the ability to pay at least 25 percent to your unsecured creditors, you may still be able to file for Chapter 13 bankruptcy protection in an effort to cure defaults on secured debt such as home mortgages, car loans, or other secured debt for nonluxury property. I can help you make this assessment properly.
A Lawyer Who Can Help You Understand Your Bankruptcy Options
I understand that this is a confusing process, but I am here to help you navigate it. Contact my office today to discuss your bankruptcy questions. I offer a free 30-minute consultation without obligation. You can reach me by phone at 512-686-4293 or 800-806-0754. You may also reach me via email.
We are a debt relief agency. We help people file for relief under the Bankruptcy Code.