If you’ve decided to file for a Chapter 7 bankruptcy, it’s important to remember that there are requirements you, as the debtor, must meet in order to be eligible to file. To determine eligibility, you’ll need to pass what’s referred to as a “means test,” to see where your income falls in comparison to the median income level in the state in which you are filing the bankruptcy. In this blog, our Northbrook Chapter 7 bankruptcy lawyer explains the qualification process and eligibility.
Passing the Means Test
In order to successfully pass the means test, you must have very little to no disposable income. The means test will take your average monthly income that was accumulated over the past 6 months before you filed for bankruptcy, then compare it against the median income of a similar household in your state. Should your income fall below the media, you will automatically qualify to file for Chapter 7 bankruptcy. Although the median income will obviously vary state to state, many people who are having severe financial strains and debt difficulties find that they pass the means test with virtually no issue, since they are likely to be making very little money to begin with.
What if my income is above the median?
If the test finds that your income is above the state’s median, it’s not to say that you are automatically exempt from being able to file a Chapter 7 bankruptcy – there are options for debtors who do not pass the means test. Since the means test is basically a balance stage where your expenses are simply weighed against your income, you can complete the entirety of the means test instead of trying to qualify for Chapter 7 bankruptcy based solely on your income. If after you deduct all allowable expenses from your income leaves you with no disposable income, you’ll be able to file for Chapter 7 bankruptcy.
Taking the First Step Towards Debt-Free Future
Filing for bankruptcy can be an overwhelming and often isolating endeavor, but it has a unique set of benefits to offer immediate relief to the issues you face. By filing for bankruptcy, you are putting an end to creditor calls, foreclosures, and potential lawsuits. If you’re currently struggling with insurmountable debt, we urge you to contact our trusted team at Bach Law Offices. We have decades of experience assisting clients through even the toughest of bankruptcy cases.
We’re ready to hear from you! Call (847) 448-0025 today to learn more about how we can help.