Before you file for bankruptcy, you must first pass the means test. Essentially, this test determines whether you qualify for Chapter 7 bankruptcy or Chapter 13 bankruptcy, if any at all. Read on to discover how the bankruptcy means test works and how a seasoned Rockland County bankruptcy attorney at The Law Offices of Allen A. Kolber, Esq. can help you make these calculations.
What is the bankruptcy means test and how does it work?
To reiterate, the bankruptcy means test calculates your income to determine whether you can file for Chapter 7 or Chapter 13 bankruptcy. How this works is that your income may be compared to that of an average family of the same size in the same county where you live. Further, this test does not use your actual income, but rather your income after necessary deductions (i.e., IRS and other government deductions).
With that being said, the means test holds that the average incomes for families residing in Rockland County, New York are as follows:
- For an individual petitioner: your annual income limit is $66,402.
- For a family of two: your annual income limit is $84,089.
- For a family of three: your annual income limit is $101,266.
- For a family of four: your annual income limit is $126,194.
- For a family of five or more: your annual income limit is $136,094; then an added $9,900 for each additional family member.
Understandably so, it might be complicated to determine your actual household size. For example, you may have a child who is temporarily living away at college, or you may have a child who is engaged but not yet married. In dynamics such as these, it is wise to get advisement from a proficient Rockland County bankruptcy attorney.
What happens if I do not pass the means test?
So if you fall below the aforementioned annual income limits, then you may proceed forward with a Chapter 7 bankruptcy filing. If not, then you may still consider a Chapter 13 bankruptcy filing. With this, you may be expected to pay back a portion of your unsecured debts to your creditors in a three- to five-year repayment plan.
But if you do not wish to undergo Chapter 13 bankruptcy, then you may consider alternatives. For one, you may attempt a debt settlement program. Or, you may consider a debt management plan. Last but not least, you should double-check that you made the necessary deductions in the bankruptcy means test. It often occurs that individuals forget certain allowable deductible expenses that would otherwise qualify them for Chapter 7 bankruptcy.
At the end of the day, when filing your bankruptcy petition, please consider contacting a competent Rockland County bankruptcy attorney. Our team at The Law Offices of Allen A. Kolber, Esq. is ready and willing to assist you.
