Navigating through the waters of bankruptcy can be complicated, especially when you are hearing a lot of confusing bankruptcy terms such as the “means test.” It may be in your best interest to secure legal help from a Dallas TX law firm who can not only explain these terms to you but show you what legal options may be available.
How the “Means Test” Can Impact Filing for Bankruptcy in Texas
You can file for 2 types of bankruptcy in Texas: Chapter 7 and Chapter 13. Chapter 7 allows for you to completely wipe out your debts. However in order to qualify, your income must be low.
To learn if your income is low enough to qualify for Chapter 7, you can take what is known in bankruptcy terms as the “means test.” If, after taking it, you learn that your income is too high, then you can proceed with filing for bankruptcy under Chapter 13.
The means test isn’t just based on your income. You could still potentially qualify for Chapter 7 if your expenses are significantly high. For instance, if your mortgage payment is pretty steep, then you may still be entitled to file for Chapter 7 bankruptcy.
How the Means Test Works for Bankruptcy in Texas
What the means test does is limit the use of Chapter 7. This allows it to be available only to those who truly cannot repay their unsecured debts, such as credit card bills.
You should first understand that your decision to file for bankruptcy in Texas must be based on your consumer debts. You won’t need to take the means test if you are filing for bankruptcy with your business.
How the means test works is dependent on 2 things, with the first being your income. You will need to figure out if your income is higher or lower than the median income in the state of Texas. A lawyer can help you with this if you aren’t sure what that amount is.
If, according to your household size, your income is less than the median income then you will not need to go any further with the means test.You will automatically qualify to file for Chapter 7 bankruptcy.
However, even if your income is greater than the median income, it doesn’t necessarily disqualify you. The second consideration is based on disposable income. After subtracting certain expenses, if what you have left over is not enough to cover your debt, then you may be able to file Chapter 7.
This part of the means test becomes much more complicated. If after going through it, you find your disposable income is more than a certain amount, then you will be unable to file for Chapter 7.
You should know that median income levels in bankruptcy terms can vary by state and by the number of people in your household. There may even be variations in different areas of the state when it comes to allowed amounts for expenses such as housing and transportation.
Even if you do qualify for Chapter 7, it may not be in your best interest to go that route. You may wish to consult with an attorney for further guidance. However if you don’t qualify, then your only option may be Chapter 13.
Once you have completed the means test, you may be wondering what your next step should be. A DallasTXlaw firm can help direct your legal decisions. Whether you are looking for resources that are available which provide free bankruptcy papers or you are looking for the best way to relieve debt, a law firm that handles bankruptcy in Texas can help.
Contacting a Dallas TX Law Firm
At Warren & Migliaccio, our goal is to protect you and your family so that you can take the necessary steps to proactively plan for your future. When financial circumstances outside of your control threaten your wellbeing, take control of your situation by contacting our Dallas, TX law firm. We’ll guide you through the legal process so you can make informed decisions and choose the best course of action. If a personalized, teamwork-driven approach sounds like what you need for your case, call 1-888-584-9614 today. We’re here to help.
