Generally when debtors make an appointment to discuss their options with a bankruptcy lawyer, they are hoping to file a chapter 7 bankruptcy that will wipe away all of their debt without having to repay any of their debts rather than having to file a chapter 13 bankruptcy. The reality is that for some debtors they will not qualify for a chapter 7 bankruptcy because their income is too high in relation to their family size for their state. The good news is that for some debtors that have an income close to their states median income, they may still be able to qualify through something called the means test.
The means test was created in 2005 when the bankruptcy laws were last updated by the Federal government. The means test is complicated and to be honest, there are many attorneys who don’t understand it or won’t utilize it to help their clients qualify for a chapter 7 bankruptcy. The means test gives debtors standard deductions much like doing your taxes for certain categories. These deductions calculate how much disposable income you have left over according to the government. If you can show that you have no disposable income on the means test, then you will most likely qualify for a chapter 7 bankruptcy. This is a different calculation than all of your expenses that you listed on Schedule I of your bankruptcy petition. Common deductions that help debtors qualify for a chapter 7 bankruptcy include additional out of pocket medical expense, having car payments, having child care expenses and having spousal support or child support payments that are due every month. There are other deductions that may be take, so you you should discuss any unusual expenses with your bankruptcy lawyer during your free initial bankruptcy consultation.
If you have additional questions please schedule a free bankruptcy consultation now by calling 206-682-7975