On Behalf of Steele Law Firm PLLC | Sep 11, 2019 | Uncategorized
Are you overrun by medical bills? Are you hopelessly behind on your credit card payments? Have you received notice of foreclosure on your home? If you answered yes to any of these questions, you understand the mental and emotional toll that a difficult financial situation can have on a person’s life. For you, bankruptcy could be a smart choice that may allow you to have a better future.
If you are thinking about bankruptcy, do you know which chapter is the best for your situation, either Chapter 7 or Chapter 13? The means test is the first step in the bankruptcy process, and the results will help you understand which one is the best option for you. You might want to learn more about the means test and the differences between the two types of consumer bankruptcy.
The means test is simply a way to determine whether a person actually qualifies for bankruptcy. The first step of this test is to take into account a person’s income. This includes every single source of money you have coming in this month. This is your paycheck, workers’ compensation benefits, spousal support, child support, commission earned, bonuses, disability income, income from rental property and more.
If your income is over a certain amount, you will then need to deduct all of your expenses. This includes your house payments, support payments, insurance and more. After these deductions, if your income is still higher than the state median income, you may be able to file for Chapter 13 bankruptcy as you have the resources to follow a debt repayment plan.
However, even after deducting your expenses, it may be evident that your income is still too high to qualify for bankruptcy. If this is because of special circumstances, you have the opportunity to explain this. If your reason is valid and acceptable, you may be able to proceed with the bankruptcy filing.
When facing an overwhelming amount of debt, your financial future is on the line. By taking the means test, you can see whether you can move forward with bankruptcy, and if you can, which chapter is most appropriate for you. If you are unsure of how you can pursue a stronger, better financial future free of some types of debt, it may help you start with a complete assessment of your case from an experienced Texas bankruptcy attorney.