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Regarding the Chapter 7 Means Test for Bankruptcy

Regarding the Chapter 7 Means Test for Bankruptcy
"Before you file for chapter 7 bankruptcy, your bankruptcy attorney in Minneapolis will administer a bankruptcy means test. This test will determine whether you have sufficient income to pay off your debts on a monthly basis.

If you are unable to make monthly payments due to a lack of disposable income, you have passed the means test and may file for chapter 7 bankruptcy after consulting with a bankruptcy lawyer in Minneapolis. Failure to pass the test will prevent you from filing for chapter 7 bankruptcy, but you can still file for chapter 13 bankruptcy.

How Does the Bankruptcy Means Test Work?

The bankruptcy means test examines the average monthly income earned over the preceding six months. The test will direct you to examine your monthly income to determine if it falls below the median income level for your state. Since this is determined on a state-by-state basis, it is recommended to consult with an expert in bankruptcy law in Minneapolis regarding the Minnesota median income level. If your income is below the median, you may file Chapter 7 bankruptcy.

If your income is greater than the state median, you must calculate your disposable income on a monthly basis. Then, you must use a worksheet to generate a budget that includes your expenses for utilities, apparel, medical care, gasoline, an automobile, your mortgage, and food. Subtract the monthly expense total from the monthly income total on the worksheet. The remaining quantity represents your monthly disposable income.

Higher disposable income decreases your eligibility to file for chapter 7 bankruptcy. The courts would prefer to establish a repayment plan based on your disposable income for these debts. This makes you eligible for chapter 13 bankruptcy.

Chapter 7 Insolvency Equals Test Failing

Chapter 7 bankruptcy provides for the discharge of debts. However, if you fail the exam, you have other options and will not necessarily be burdened with debt if you are unable to pay the amount.

The court will adjust, monitor, and assess your budget if you file for chapter 13 bankruptcy. You will be required to repay creditors over a period of five years. Any remaining balance following five years of repayment will be discharged by the court. The court will ensure that you can pay for essentials such as food and apparel.

The bankruptcy means test exists to prevent debtors who are able to repay their debts from abusing the system. Bankruptcy is a life-altering decision that should only be made with the help of a Minneapolis bankruptcy law expert.""

" - https://www.affordablecebu.com/
 

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"Regarding the Chapter 7 Means Test for Bankruptcy" was written by Mary under the Finance / Wealth category. It has been read 228 times and generated 1 comments. The article was created on and updated on 03 June 2023.
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