{"id":4356,"date":"2020-10-19T10:54:16","date_gmt":"2020-10-19T10:54:16","guid":{"rendered":"https:\/\/cutlerbankruptcy.com\/?p=4356"},"modified":"2022-11-16T10:01:45","modified_gmt":"2022-11-16T10:01:45","slug":"declaring-bankruptcy-means-test-and-chapter-7","status":"publish","type":"post","link":"https:\/\/cutlerbankruptcy.com\/declaring-bankruptcy-means-test-and-chapter-7\/","title":{"rendered":"Declaring Bankruptcy: Means Test and Chapter 7"},"content":{"rendered":"<h2><span class=\"ez-toc-section\" id=\"What_is_a_bankruptcy_means_test\"><\/span>What is a bankruptcy means test?<span class=\"ez-toc-section-end\"><\/span><\/h2><div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<label for=\"ez-toc-cssicon-toggle-item-663cc839b078f\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-663cc839b078f\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/cutlerbankruptcy.com\/declaring-bankruptcy-means-test-and-chapter-7\/#What_is_a_bankruptcy_means_test\" title=\"What is a bankruptcy means test?\">What is a bankruptcy means test?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/cutlerbankruptcy.com\/declaring-bankruptcy-means-test-and-chapter-7\/#What_is_the_means_test_for\" title=\"What is the means test for?\">What is the means test for?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/cutlerbankruptcy.com\/declaring-bankruptcy-means-test-and-chapter-7\/#What_if_I_pass\" title=\"What if I pass?\">What if I pass?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/cutlerbankruptcy.com\/declaring-bankruptcy-means-test-and-chapter-7\/#What_if_I_fail\" title=\"What if I fail?\">What if I fail?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/cutlerbankruptcy.com\/declaring-bankruptcy-means-test-and-chapter-7\/#Do_you_need_more_bankruptcy_information_Talk_to_a_bankruptcy_attorney_now\" title=\"Do you need more bankruptcy information? Talk to a bankruptcy attorney now!\">Do you need more bankruptcy information? Talk to a bankruptcy attorney now!<\/a><\/li><\/ul><\/nav><\/div>\n\n<p><span style=\"font-weight: 400;\">In the bankruptcy process, a means test determines who is qualified for debt-settlement through a bankruptcy Chapter 7. Family size, expenses, and income are taken into consideration to determine if a debtor has enough income to be able to repay outstanding debts.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">(Bankrupt individuals who do not pass the means test or who wish to keep certain property can instead opt for restructuring. Filing for <a href=\"https:\/\/cutlerbankruptcy.com\/chapter-13-information\/\">bankruptcy under Chapter 13<\/a> would allow you to restructure debts you owe and pay back most of it through a repayment plan.)<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"What_is_the_means_test_for\"><\/span><i><span style=\"font-weight: 400;\">What is the means test for?<\/span><\/i><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">The means test is composed of two parts that are both meant to see whether debtors have enough disposable income that can be allocated to paying off creditors. Bankruptcy attorneys fill out the required form together with other supporting documents. The bankruptcy court will then evaluate the submitted paperwork.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This test is primarily for consumer bankruptcy or those with medical debts or credit card debts. It is not required for business bankruptcy. This article explores this bankruptcy procedure and how the means test affects your bankruptcy case.<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><strong>Step 1<\/strong><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Broadly, this part checks your household income. Following bankruptcy laws, it must be below the median income in your state. You can begin by collecting proof of your monthly income for the last six months. If your income does not exceed the median in your state, you pass this part and hopefully can <a href=\"https:\/\/cutlerbankruptcy.com\/chapter-7-information\/\">file a Chapter 7<\/a>.<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><strong>Step 2<\/strong><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">\u00a0<img fetchpriority=\"high\" decoding=\"async\" class=\" wp-image-4360 alignright\" src=\"https:\/\/cutlerbankruptcy.com\/wp-content\/uploads\/2020\/10\/Chapter-7-300x300.jpg\" alt=\"bankruptcy Chapter 7\" width=\"353\" height=\"353\" srcset=\"https:\/\/cutlerbankruptcy.com\/wp-content\/uploads\/2020\/10\/Chapter-7-300x300.jpg 300w, https:\/\/cutlerbankruptcy.com\/wp-content\/uploads\/2020\/10\/Chapter-7-150x150.jpg 150w, https:\/\/cutlerbankruptcy.com\/wp-content\/uploads\/2020\/10\/Chapter-7.jpg 338w\" sizes=\"(max-width: 353px) 100vw, 353px\" \/>This part is about expenditure. Prepare documentation of your groceries, rent, medical costs, clothing, and other living expenses for the last six months. These are deducted from your income and what&#8217;s left is considered &#8216;disposable&#8217;. Under the bankruptcy code, the latter could be allocated to pay back your lenders.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Be extra thorough when gathering documents for the above. Bankruptcy law is strict. Avoid making crucial mistakes and do not omit items or list down inconsistent values (say, different amounts for monthly payments). Bankruptcy attorneys could help ensure you do this part correctly.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">When disposable income is low enough, you may qualify to <a href=\"\/who-cant-file-chapter-7-bankruptcy\/\">file a Chapter<\/a> 7. (If you decide on filing a Chapter 13, this would factor into your payment plan. A <a href=\"https:\/\/cutlerbankruptcy.com\/bankruptcy\/\">bankruptcy petition lawyer<\/a> can explain this to you in more detail).<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"What_if_I_pass\"><\/span><i><span style=\"font-weight: 400;\">What if I pass?<\/span><\/i><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Once you pass, discuss with your attorney if you should push through with a Chapter 7 type of bankruptcy. If you wish to have your unsecured debt discharged, it could indeed be the right choice. Discharging your credit card debt, medical bills, and other unsecured debts through Chapter 7 could be the best debt-relief option for you.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Take note, however, that different types of bankruptcy work best in different circumstances. Make sure you get a reliable bankruptcy attorney helping you as you make your decision.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"What_if_I_fail\"><\/span><i><span style=\"font-weight: 400;\">What if I fail?<\/span><\/i><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Although you cannot appeal, it does not automatically make filing a Chapter 13 your only option. Since the income and expenses submitted are from the last six months, you can take the test again after six months.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">(If you fail again or if you cannot wait for another six months before you file for bankruptcy, you might need to settle for a Chapter 13. As mentioned, under this bankruptcy type, you pay back what is owed in three to five years.)<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Undergoing bankruptcy counseling, contacting a <strong>bankruptcy law firm<\/strong>, and taking the means test are a few of the first steps that you must take when filing for bankruptcy.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Rebuilding credit after bankruptcy could be difficult. However, keep in mind that secured loans and secured credit cards help counter the bankruptcy filing on your credit report.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Do_you_need_more_bankruptcy_information_Talk_to_a_bankruptcy_attorney_now\"><\/span><i><span style=\"font-weight: 400;\">Do you need more bankruptcy information? Talk to a bankruptcy attorney now!<\/span><\/i><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">If you are considering bankruptcy, it is important to understand bankruptcy rules. Our experienced <strong><a href=\"https:\/\/cutlerbankruptcy.com\">bankruptcy lawyers in Illinois<\/a><\/strong> can address your queries so you can begin the first step to a fresh start. Contact us at <strong>Cutler &amp; Associates, LTD<\/strong> and schedule your free initial consultation.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>What is a bankruptcy means test? In the bankruptcy process, a means test determines who is qualified for debt-settlement through a bankruptcy Chapter 7. Family size, expenses, and income are taken into consideration to determine if a debtor has enough income to be able to repay outstanding debts. (Bankrupt individuals who do not pass the [&hellip;]<\/p>\n","protected":false},"author":5,"featured_media":4359,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[],"_links":{"self":[{"href":"https:\/\/cutlerbankruptcy.com\/wp-json\/wp\/v2\/posts\/4356"}],"collection":[{"href":"https:\/\/cutlerbankruptcy.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/cutlerbankruptcy.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/cutlerbankruptcy.com\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/cutlerbankruptcy.com\/wp-json\/wp\/v2\/comments?post=4356"}],"version-history":[{"count":1,"href":"https:\/\/cutlerbankruptcy.com\/wp-json\/wp\/v2\/posts\/4356\/revisions"}],"predecessor-version":[{"id":5744,"href":"https:\/\/cutlerbankruptcy.com\/wp-json\/wp\/v2\/posts\/4356\/revisions\/5744"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/cutlerbankruptcy.com\/wp-json\/wp\/v2\/media\/4359"}],"wp:attachment":[{"href":"https:\/\/cutlerbankruptcy.com\/wp-json\/wp\/v2\/media?parent=4356"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cutlerbankruptcy.com\/wp-json\/wp\/v2\/categories?post=4356"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cutlerbankruptcy.com\/wp-json\/wp\/v2\/tags?post=4356"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}