Qualifying For Chapter 7
In many cases, Chapter 7 bankruptcy is a viable debt relief strategy, but before making any major financial decisions, it’s important to understand your current eligibility under the “means test.” In short, the “means test” is a statutory formula that determines whether you qualify for Chapter 7 bankruptcy. The means test requires an analysis of your current monthly income and disposable monthly income in relation to a state’s median or a presumption of abuse figure.
In simpler and more general terms, if you make too much at your job or have too much disposable income, then you’re prohibited from filing for Chapter 7 and must instead file a repayment plan under Chapter 13 bankruptcy.
At the Law Office of Scott C. Polman, I offer debt relief assistance to clients throughout the Niles, Illinois, area. My experience and knowledge of the means test allows me to determine your eligibility for Chapter 7 bankruptcy. By providing personalized guidance throughout the means test process, I work to help you understand the many questions involved and how they relate to your unique situation. If you’re wondering whether you qualify for Chapter 7 bankruptcy, contact my law firm for an initial consultation.
Learn More About The Numerous Chapter 7 Eligibility Factors
For means test purposes, the threshold issue, even before calculating your gross income, is whether you have “primarily consumer debt.” Pursuant to 11 USC §101(8), the term “consumer debt” is defined as debt which is incurred by an individual primarily for a personal, family, or household purpose. It follows that, under §707(b)(1), the means test is inapplicable if the nature of your debt is primarily business related.
For most people, however, the means test will apply, and therefore your gross income often stands as one of the most important factors in determining your eligibility for Chapter 7.
Many attorneys may not take your case if you earn more than the current median family income as published by the U.S. Trustee. Rather than dismiss your case immediately, however, I will take the time to walk you through the means test and help you determine your true eligibility.
During your means test analysis, I’ll offer advice on the many components of the process, including:
- Your gross income over the last six months
- If you were unemployed, whether you received unemployment benefits
- Do you have any other sources of income — maintenance or child support? Pension or retirement income? Spousal contributions (if not filing jointly)?
Under the means test, you may be able to explore deductions for expenses or payments that may lead to eligibility for Chapter 7, including:
- Payments related to secured debt, like your house or car
- Payroll tax withholdings
- Health and life insurance premiums
- Mandatory contributions to retirement plans or union dues
- Child support and other court-ordered payments
- Medical expenses
Contact A Skilled Chicagoland Bankruptcy Means Test Lawyer
Exploring your debt relief options can be a confusing task, especially after discovering that your income exceeds the median family income of your state. My means test guidance is designed to eliminate your confusion and provide timely and informed answers to your questions about Chapter 7 eligibility.
BAPCPA Disclosure: My firm is a debt relief agency as designated by federal law. I help people file for bankruptcy relief under the Bankruptcy Code.