Taking Chapter 7 Bankruptcy Means Test

The bankruptcy law adopted the Chapter 7 bankruptcy means test, once it has been upgraded in October 2005. Also, there has to be kept in mind that Chapter 7 bankruptcy test is practically a formula designed to keep filers with higher incomes from filing for Chapter 7 bankruptcy.

Some people mistakenly believe that they must be completely penniless in order to use Chapter 7, because of this new requirement. But this is not true. There has to be paid attention to the fact that, even under the new law, you earn significant monthly income and still qualify for Chapter 7 bankruptcy.

Even more, the ones who would have become eligible for Chapter 7 bankruptcy under the old law can still successfully apply for Chapter 7 bankruptcy under the new law.

An important aspect which has to be taken into consideration is being represented by the fact that Chapter 7 bankruptcy means test has been practically created in order to limit the use of Chapter 7 bankruptcy law to those who truly can’t pay their debts. Also, there has to be kept in mind that Chapter 7 bankruptcy means test deducts specific monthly expenses from your “current monthly income”, in order to arrive at your monthly “disposable income”. The more likely you won’t be allowed to use Chapter 7, as the higher your disposable income gets.

You must first determine whether your income is more or less than the median income in your state, in order to take Chapter 7 bankruptcy means test. You must figure out whether you would have enough left over, after subtracting certain expenses, to repay some of your debt, if you earn more than the median. It is important as well to be considered that Chapter 7 bankruptcy means test is definitely a requirement for becoming eligible for this type of bankruptcy.