There are two types of bankruptcy available to consumer debtors. You can file a bankruptcy under Chapter 13 and doing so will work to reorganize your debt into a plan of repayment. This plan will include repayment of your secured debt such as your home loan, and also require you to repay part of your unsecured credit card debt. But if you are eligible for a Chapter 7, you get to discharge your credit card debt and no longer make those monthly payments. In order to file a Chapter 7 you have to first “pass” the means test.
The means test is a legally required mathematical computation that must be performed before you file for bankruptcy. The test is complex and is best left in the hands of an experienced bankruptcy attorney. The test examines the following:
- The amount of secured debt you have to include in your bankruptcy.
- The amount of income you have coming in for the “lookback” period, which is a set time prior to when you file your case.
- The amount of income is compared to your secured debt amount, and if the end result is that you have enough disposable income to pay back part of your unsecured debt you will be required to file a Chapter 13.
The means test includes a demographic element, which means the baseline number for Chapter 7 eligibility depends on where you live and certain other factors. In order to find out if you qualify for a Chapter 7, call our office for more information. We will analyze your financial situation and let you know your choices.
For more information about bankruptcy and the means test, contact us at www.DsouzaLegalGroup.com. We will help by coming up with solutions that work for you.