Do I Qualify for Chapter 7 Bankruptcy?
The question of whether a person can qualify for Chapter 7 bankruptcy became an issue in 2005 with the enactment of the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA). Creditors lobbied for a Means Test to be added to the Bankruptcy Code as a way of preventing people who could afford to pay some or all of their debt from filing under Chapter 7. The Means Test has done very little to prevent actual bankruptcy fraud; however, it has made the process of filing a Chapter 7 bankruptcy case slightly more complex for individuals who do not retain an experienced bankruptcy attorney.
The bankruptcy lawyers of Pioletti & Pioletti have extensive experience calculating the Means Test. We understand the laws pertaining to the Means Test and use every available resource and advantage to ensure that our clients are filing under the chapter of bankruptcy that is in their best interest. Contact our office today to schedule a free bankruptcy consultation to discuss whether you qualify for Chapter 7 bankruptcy and, if so, if that is in your best interest.
What is the Means Test?
The Means Test compares your income to the median income of families of the same size in the same county as you reside. The median income is periodically adjusted to reflect the current level of income. If your income is below the median income for your area, you qualify for Chapter 7 bankruptcy, provided there are no other issues that prevent you from filing under Chapter 7. If your income is above the median income level, you may still qualify for Chapter 7 bankruptcy.
The Means Test is divided into two parts. The first part compares your gross income to the median gross income for your area; however, the second part takes into consideration allowable expenses to test whether your net disposable income exceeds the amount required to qualify for Chapter 7 bankruptcy. Allowable expenses include payroll taxes, health insurance, life insurance, daycare, food, shelter, vehicle expense, medical costs, retirement contributions, clothing, and other living expenses. Not all of your monthly expenses are allowable and the amounts you may deduct are limited. If your net disposable income is below a certain level after deducting your allowable expenses, you qualify for Chapter 7 bankruptcy.
What If I Do Not Qualify for Chapter 7 Bankruptcy?
If you do not pass the Means Test, you can still eliminate your debt problems by filing for Chapter 13 bankruptcy. Chapter 13 bankruptcy is a reorganization whereby you pay a portion of your debt back to your creditors over a three to five year term. The amount you pay back to your creditors is determined by several factors including your net disposable income on the Means Test, your actual income, your expenses, and your debt.
Contact Our Office for a Consultation with an Experienced Illinois Bankruptcy Attorney
The bankruptcy lawyers of Pioletti & Pioletti will help you find an affordable solution to your debt problems. We represent clients throughout central Illinois including residents of McLean, Woodford, Tazewell, and Peoria counties by providing compassionate, competent legal services. Contact our office at 309-938-4838 to schedule your free consultation.
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