When filing for bankruptcy, come prepared with an understanding of its basics, such as the means test for Chapter 7 bankruptcy. Guidance from Dallas bankruptcy lawyers also can be important when filing.
There are several steps involved in the bankruptcy process. Some of these steps are used to screen prospective filers to determine their eligibility for the type of bankruptcy they want to file. The means test for Chapter 7 bankruptcy is used to determine whether filers qualify.
Chapter 7 bankruptcy is liquidation bankruptcy. It utilizes the sale of assets to pay off debts, thereby eliminating them. So in order to qualify for this type of bankruptcy, filers need to meet specific income criteria.
Basic Overview of the Means Test
The first part of the test is very simple; it determines whether monthly income is lower than the median income for a household of your size in the state of Texas. If so, then you may qualify to file Chapter 7.
If income is higher than the state median, you will have to take the next step of the means test. This stage involves calculating monthly income after allotted expenses, then figuring out how much disposable income remains. If it is determined that you have adequate disposable income to pay off part of your debts, then you may have to file for Chapter 13 instead.
The means test — as well as many other aspects of bankruptcy – can be complicated and confusing; every case is unique when filing for bankruptcy. If you would like a more comprehensive explanation of the means test for Chapter 7 bankruptcy or of any part of the bankruptcy process, speak with Dallas bankruptcy lawyers.