What do I need to know about the bankruptcy means test?

 When individuals file a Bankruptcy case, they have to pass the “Means Test”.  An experienced Bankruptcy attorney will always fill in the information for the Means Test to ensure that you qualify for a Chapter 7 Bankruptcy filing.

The purpose of the Means Test is to determine whether your income qualifies you for a Chapter 7 Bankruptcy or a Chapter 13 bankruptcy. Essentially, the Means Test compares your income to the income of an average family of the same size in the same county in which you live.  The Means Test income is not the same as your actual income, but rather takes deductions for certain IRS and government deductions.

Therefore, many people who try to take the Means Test online mistakenly think they earn too much to qualify for a Chapter 7 Bankruptcy. In reality, the average incomes in Rockland County, New York that qualify for a Chapter 7 Bankruptcy range from $51,000 for an individual, $65,000 for a couple, and $91,000 for a family of 4.

What if I earn more than the average family income for the county in which I live?

If your family income is greater than the average family income you may file a Chapter 13 case, in which you repay a small monthly amount to the Bankruptcy Trustee for 3-5 years.  The Bankruptcy Trustee then distributes the monthly amount to all your creditors.  However, the Chapter 13 Plan can provide for as little as 1% payback of your unsecured debt, and the remainder of the debt will then be discharged forever.

If your financial situation is becoming overwhelming, it may be time to consider Bankruptcy Relief. Bankruptcy can allow you to take control of your finances and get you back on your feet. Contact an experienced Bankruptcy attorney who can provide you with a Fresh Start today.

If you require the services of an experienced Bankruptcy attorney, contact the Law Offices of Allen A. Kolber, Esq. today to schedule a consultation and discuss your options.