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The means test in Chapter 7 Bankruptcy

On Behalf of | Oct 12, 2020 | Chapter 7 Bankruptcy

There are a variety of circumstances in life that could leave a person in Georgia or elsewhere facing extended periods of monetary unrest. After searching through the available options, some individuals may feel that bankruptcy could be just the tool to help them regain control over their financial futures, but they might not be sure if they are eligible to file. The process of determining eligibility for Chapter 7 bankruptcy is known as the means test and understanding the steps involved in this test could prove imperative.

Experts indicate that the means test is used to determine whether a person is eligible to seek relief through Chapter 7 bankruptcy. This test may consist of two parts, the first of which will seek to determine if one’s income is below the median income in his or her state. If one’s income is below this threshold, a person may be eligible to begin the filing process.

Those with incomes above the state median may be required to take part in a second stage, in which they may be required to prove that their disposable income is below a certain threshold. Disposable income consists of any amount of income that remains each month after certain expenses are paid. Knowing which expenses should be listed as allowable and which fall under disposable could play a vital role in preparing for the second part of the means test.

The means test is only one part of the process of filing for Chapter 7 bankruptcy. Those who wish to know more about every stage of the bankruptcy process as well as insight on all their available options could find it helpful to retain the services of an experienced attorney prior to choosing a path. An attorney can work with a client in Georgia in preparing to pursue the full amount of relief achievable through the proper channels and assist him or her through every step of the process.