Chapter 7 Means Test in Arkansas
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There are many possible benefits of declaring
Chapter 7 bankruptcy. Also known as a liquidation bankruptcy, Chapter 7 allows individuals
who are overwhelmed by significant debt obtain an economic clean slate.
Most debt is discharged and wiped away, providing much needed relief from
your financial obligations.
Since Chapter 7 erases most of your debt, the bankruptcy code reserves
this form of monetary reprieve for individuals who are in dire financial
need. Petitioners must meet certain criteria to qualify for a liquidation
bankruptcy. The means test is a federal formula that determines if you
meet the requirements to file for protection under Chapter 7.
If you are unsure whether or not you may pass the means test and declare
Chapter 7 bankruptcy,
DeLoache Law Office can help! Our experienced Jonesboro bankruptcy attorneys offer the insightful
and astute guidance you need.
Call us at (870) 890-2749 to request a confidential consultation!
How does the means test work?
The means test was designed to determine whether or not bankruptcy candidates
will have income available to pay back some of their debt obligations.
If you do not qualify under the means test, petitioning for
Chapter 13 bankruptcy might be your next best option.
The basic steps of the Chapter 7 means test are as follows:
Calculating your current monthly income (CMI): This is an average of your gross monthly income over the last six months.
If you have only recently experienced a financial setback, your attorney
might advise you to reserve declaring bankruptcy for a month or two.
Compare your CMI to the median income for a household of your size in your
geographic area: If your current monthly income is less than the median income for similar
households in Arkansas, you automatically pass and do not need to complete
the rest of the means test.
Determining your disposable income: If you did not automatically qualify by your CMI alone, you must determine
if you have enough income left over after allowable expenses are deducted
to pay off at least a portion of your debt. If your disposable income
is over the allowable limit, you will fail the means test.
Decide if declaring Chapter 7 is best for you: Passing the means test is only part of the decision when determining whether
filing for a liquidation bankruptcy would best protect the financial future
of you and your family. Our supportive team of Arkansas bankruptcy lawyers
can provide the strategic legal counsel required to choose which option
can best deliver the financial fresh start you are looking for.