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Passing the Chapter 7 Means Test

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Chapter 7 bankruptcy can be a great way for individuals struggling with debt to start over and get a fresh chance to work toward financial security. Through Chapter 7, you receive an automatic stay and have your debts almost completely wiped out. Not everyone can file, however, and it's important to find out if you're eligible before beginning the process.

Our team at DeLoache Law Office believes that financial security is something everyone should benefit from. We've been working for over 20 years to make that a reality for thousands of individuals and would be honored to do the same for you. When you partner with a West Memphis bankruptcy attorney from our firm, you can have peace of mind that we will do everything to give you a positive outcome.

Eligibility for Chapter 7 Bankruptcy

In order to be approved for Chapter 7 bankruptcy, you are required to pass what is known as a means test. The test determines whether your overall income qualifies you to file – essentially, if your income is low enough. Individuals who are deemed ineligible by the means test must instead file for Chapter 13 bankruptcy. Chapter 7 is the more conclusive solution to debt and many people hope to qualify.

The test involves two basic questions:

  • Is your income more than the median?
  • Is your disposable income enough to repay certain debts?

The first is answered by comparing your monthly income to the average income for a similarly sized household in your state. If you answer yes, then the second question does not apply. If your income is more than the median, you'll need to move to question two. After accounting for your monthly expenses, do you have enough money left over to pay off unsecured debts? An income that exceeds the specified amount is unqualified for Chapter 7 and will be eligible for Chapter 13.

It is important to evaluate your income against the appropriate average for your area. Our West Memphis bankruptcy attorney can evaluate your individual circumstances, advise you on the next step, and guide you through the means test.

Don't wait to secure our assistance – we can help you turn your future around for good. Call DeLoache Law Office at (888) 233-7016 today for permanent bankruptcy relief.