The decision to file for bankruptcy is no doubt one that you agonize over. Yet after making it, another large decision remains: which chapter should you file under?
Many people come to us here at the Law Offices of Brian A. Barboza wanting to file under Chapter 7. If you share the same desire, it is easy to understand why; Chapter 7 offers the chance to have certain types of debts discharged. Yet this benefit is one you must qualify for through the Chapter 7 means test.
What is the means test?
The aim of the means test is to determine whether you actually may have the resources to settle your debts. If you fail to qualify under the means test, the assumption is that you may be attempting to abuse the privilege that Chapter 7 offers. Yet even if you fail the means test, this does not necessarily mean that personal bankruptcy is not an option for you. The court may simply ask you to convert your petition over to a Chapter 13 case (which provides bankruptcy protection while allowing you the time to repay your debts.
The many steps of the mean test
Per the website for the Federal Judiciary, the first step in the means test is to compare your aggregate monthly income with that of your demographic in the state (if your income is lower than the state average, you qualify). If you progress to the second step of the test, the court projects your income out over five years. If it is less than $12,850 or 25% of the total amount of your nonpriority unsecured debt, you qualify to file under Chapter 7.
You can learn more about the general details of a Chapter 7 bankruptcy by continuing to browse through our site.