Qualifying For Chapter 7: The Means Test
Your eligibility for a Chapter 7 bankruptcy filing will depend to a large degree on whether or not you pass the means test. The means test is a formula that uses your income and expenses to determine whether you exceed certain limits that will disqualify you from filing a Chapter 7 bankruptcy.
The means test is designed to weed out people who are able to pay their debts. The test determines an amount of “disposable income” by deducting some expenses from your current monthly income. In many cases, the higher your disposable income, the less likely it is that you will be able to file for Chapter 7 bankruptcy protection. Consumers with high incomes may fail the means test and be eligible for a Chapter 13 bankruptcy filing instead. It is important to discuss this with an experienced bankruptcy attorney to determine whether or not this is your situation.
Means Test Exceptions
The means test may not be required if most of your debt is business related. There are also modifications to the test for those who earn above the state’s median monthly income and other situations where the means test does not apply. At Regazzi Law, LLC, our attorneys will be able to assess whether you qualify for any of these special circumstances.
We will take into account means test exceptions like business debt and consumer versus nonconsumer debts. In addition, what counts as income, how to compare your income to the state median income, household size, deductions and expenses are all technical areas of bankruptcy law our attorneys will consider.
Why It’s Best To Consult With An Experienced Bankruptcy Attorney
If you do not pass the means test, you will be ineligible for Chapter 7 bankruptcy protection. Even if you do pass the means test, you may still want to consider that it may not be in your best interest to file. It’s best to consult with our attorneys to discuss your alternatives before you make the final decision in this complex and serious situation. Expert advice often makes the difference. Do not leave this to someone’s “best efforts.” Call our office in Albuquerque at 505-265-1000 or email us to schedule your free consultation. We serve clients throughout New Mexico.