The Bankruptcy Means Test | Bankruptcy Attorney | St. Charles, MO
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The Bankruptcy Means Test

Bankruptcy Attorney in St. Charles, MO

When you are deep in debt, there are several ways on how to pay off your dues. One could be selling nonexempt property and using the income to pay off the balance. Another would be through wage garnishment where your employer would be requested to hold your wages and use it to pay debts. This can be quite stressful for the individual at its receiving end and all these payments can feel like there is no end to their financial struggles. 

One option for these individuals is to file for bankruptcy. Typically, persons whose income is lower than the state median are required to file for Chapter 7 bankruptcy. While the minimal requirement might make it seem easy to qualify for, compared to Chapter 13 bankruptcy, there is still a way to filter out who can file for chapter 7 bankruptcy. This test is called the bankruptcy means test.

The bankruptcy means test is a test that determines an individual’s eligibility for debt erasure by chapter 7 bankruptcy. This kind of test takes into account several factors that could play a role in your eligibility for bankruptcy filing. This process can be quite daunting and pricey, not to mention confusing which is why it is best to seek legal counsel when dealing with chapter 7 bankruptcy, wage garnishment, and other money-related problems. 

Are you thinking about taking the bankruptcy means test? Do you think you qualify for chapter 7 bankruptcy? Are you in debt? If you mentally answered a yes to one or all of these, chances are you need a bankruptcy attorney to sort your matters out. Seek legal assistance from a St. Charles, MO bankruptcy lawyer to help you face bankruptcy head on. 

What is the Bankruptcy Means Test?

From the word itself, the bankruptcy means test is a qualifying test to see if an individual is eligible for filing for debt erasure by way of chapter 7 bankruptcy. The bankruptcy means test takes family size, expenses, and income into consideration to check for adequate disposable income to pay off debts. This test was created in order to filter out the eligible ones for chapter 7 bankruptcy. Others who wish to keep assets have an option to file for chapter 13 bankruptcy

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When you’re in debt, it’s difficult to focus on anything else. But there are steps that you can take to get out of debt – even if your credit is damaged or your income has been cut off completely! Call our St. Charles bankruptcy attorneys at Westbrook Law Group to find out how to escape the shackles of debt and get relief in Missouri.

Chapter 7 vs Chapter 13. What's the Difference?

We’ve often heard of these two types of bankruptcies and we know by this point that Chapter 7 is the kind to file for debt erasure. But what exactly is the difference between the two? To narrow the gap, chapter 7 bankruptcy is one that most people file for since most people can fit into the qualifying mold pretty easily. After all, the requirement is that the person must have an income that is below the state’s median income.  Chapter 13 on the other hand is advisable for people with a higher income. They get to keep their assets and just pay the equivalent amount in order to pay off debts. 

The difference is chapter 7 deals more with liquidation while chapter 13 is a reorganization type of bankruptcy. Individuals and business entities are open to file for chapter 7 bankruptcy while chapter 13 is only for individuals and sole proprietors. 

Discharge time varies, as well. Those filing for chapter 7 bankruptcy can expect the discharge around three to four months. It’ll typically take chapter 13 filers three to five years to receive the discharge, usually until the payment of unsecured creditors is completed. 

Both have pros and cons to them. A benefit of filing for chapter 7 bankruptcy is that it allows debtors to discharge qualifying debts and get started on their feet quickly. However, it doesn’t provide a way to catch up on missed payments and foreclosures. On the other hand, Chapter 13 allows debtors to keep their items and assets while catching up on missed payments. Monthly payments however must be made along with paying a part of general unsecured debts. 

How does bankruptcy means test work?

The bankruptcy means test is notable for being quite pricey and complicated. As such, it is best to get legal advice so you can be familiar with the concepts to make the right decisions. The bankruptcy means test is designed to see if you have disposable income which can be used to pay off your debts. To kickstart this process, you may need to get your bankruptcy attorney to file the form and submit it to the court. 

The bankruptcy means test is open for those with consumer debts such as medical and credit card debt. 

The first step to the bankruptcy means test is to gather documentation of your expenses within the past six months and see if it aligns with the state’s median income. There are certain adjustments that can be made, say if you lost a job or gained employment within the given time frame. If it still falls below the median income, you are eligible for chapter 7 bankruptcy. 

The test is relatively easy to pass and a reported 12% of debtors passed it. However, always be open to the possibility of failure. 

You must also gather documentation of your expenses within the past six months including rent, groceries, and clothing. These are known as allowable expenses. Anything left of these is called disposable income and will be used to pay off your debts. If the disposable income is also still quite low, you can qualify for chapter 7 bankruptcy. Should you file for chapter 13 bankruptcy, you get to keep your assets but the allowable expenses portion would be used for your repayment plan.

Got any concerns regarding the bankruptcy means test process? Consult with your St. Charles, MO bankruptcy attorney to get to the meat of the matter and solve your financial issues smoothly.  

What Happens if You Pass the Bankruptcy Means Test?

Passing the bankruptcy means test is your go signal to file for a chapter 7 bankruptcy. Chapter 7 bankruptcy is quite lenient with most debts, such as medical bills and credit card debt. In some situations, it is advisable to file for chapter 13 bankruptcy which enables you to get caught up in your debt while still keeping your assets. 

If you fail the test, however, there is no appeals process. You can, however, retake the test in six months, providing an accurate reflection of your financial situation over the said span of time and if it meets the requirements, you can then file for chapter 7 bankruptcy.

Seek Legal Advice from a Bankruptcy Attorney

Is bankruptcy getting the best of your life right now? Are you stressed out with all your debts? If this sounds like you, the best route to take is to contact a St. Charles, MO bankruptcy attorney to help smoothen out your financial issues. Contact Westbrook Law Group and face your bankruptcy problems head on. Schedule a consultation with a St. Charles, MO bankruptcy attorney right away!

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