The Means Test

Sometimes, financial situations may become too difficult for an individual to handle. Sometimes the use of credit cards will prompt a person to spend more than he or she can pay for, in the end. Other times, loans for one’s house or education can become too overwhelming. The loss of one’s job or a pay cut can worsen such situations to the point of necessitating drastic measures. In situations like these, filing for bankruptcy is one of the most common forms of debt resolution here in the US.

What is Chapter 7 bankruptcy

If you find yourself with more debt than you can feasible pay off on time, then you may want to consider filing for bankruptcy. Chapter 7 bankruptcy, otherwise known as liquidation bankruptcy, is one of the more desirable options for individuals and families in fiscal distress. Under Chapter 7, the filer will sell off any non-exempt assets owned in order to bring in money to pay off the money owed. Because it is so popular, the US government has set in place rules regarding the determination of who is eligible for this type of debt resolution. One is the requirement that filers must pass the means test.

The Means Test

The means test is a way of determining the eligibility of an individual wishing to file for Chapter 7 bankruptcy. This rather complex calculation takes into account one’s income, as compared to the median income of the area, and one’s disposable income and unsecured debts. If your income is lower than median income and your disposable income, as calculated over a 5 year period, is less than 25% of your unsecured debts, then you will pass the means test and be granted the ability to file Chapter 7.

Contact Us

If you think that Chapter 7 bankruptcy is the right option for resolving your debts, call the Austin bankruptcy attorneys of Slater, Kennon & Pugh Ltd.LLP today at 512-338-1100 to speak with one of our qualified attorneys about your situation.