In order to file Chapter 7 Bankruptcy, you will need to complete and pass a Means Test, which is filed as part of your bankruptcy paperwork with the Court. In general, the Means Test takes a six month look at your income and compares that with the median income for a similar family in your state. If you earn more than the median income, minus allowable expenses, and show enough disposable income to pay back your creditors while maintaining a minimal standard of living, you may not qualify for a Chapter 7 bankruptcy. However, this does not mean you cannot utilize the protection of the bankruptcy court to help you resolve your financial difficulty.
In the event you do not qualify for a Chapter 7 Bankruptcy, you may still qualify for a Chapter 13 Bankruptcy. Under Chapter 13, your attorney will calculate a payment plan, which generally ranges from 36-60 months, to provide payments to your creditors in line with your budget. At the completion of your bankruptcy plan, you are entitled to a discharge of the remaining debt, subject to certain restrictions. Your bankruptcy plan may only provide for a return of a certain percentage of your unsecured debt, such as medical bills and credit cards. In the event there is a portion of this debt remaining, it is subject to discharge at the end of the case. While Chapter 13 takes longer to complete than a Chapter 7, you are still protected from collection efforts, foreclosure, repossession, and lawsuits while you are in an active bankruptcy. Although you will be placed on a budget, you will have peace of mind by being protected from your creditors while maintaining a manageable payment plan to help get you on the right financial path.
About Nachawati Law Group
Nachawati Law Group represents parties in mass tort litigation, businesses and governmental entities in contingent litigation, and individuals in complex personal injury litigation. For more information, visit contact help@ntrial.com or call 214-890-0711.