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Can I File for Chapter 7 Bankruptcy?

Can I File for Chapter 7 Bankruptcy?

Not everyone can file for chapter 7 bankruptcy. You must first pass the Chapter 7 Bankruptcy Means Test. If you do pass this legal test, then you (or you and your spouse) will qualify and may file for chapter 7 bankruptcy.

What exactly is the Means Test?

The Means Test was designed to limit the number of people who can file for chapter 7 bankruptcy--to those who truly cannot pay back their debts. If your household income is low enough, then you will pass the Means Test and can file for chapter 7 bankruptcy. The Means Test consists of deducting certain monthly expenses from your current monthly income (your average income over the past six months) to calculate your disposable monthly income (DMI). If your DMI is too high, then you probably will not qualify for chapter 7 bankruptcy.

If your income is less than your state's median income for your household size (taking into account the number of your dependents) then you automatically pass the Means Test and you can file for chapter 7. If you are married and your and your spouse wish to file jointly, then both spouse's incomes must be used in the Means Test.

However, if your income is higher than your state's median income, the Means Test gets much more complex. You may still qualify to file chapter 7, but in order to do so, you must factor in certain allowed expenses. The expenses that are used in the Means Test varies from state to state and even county by county. After factoring in these allowed expenses, if your DMI is low enough, then you will pass the Means Test and qualify for the chapter 7 bankruptcy. If your income is still too high, then you fail the Means Test and you cannot file for chapter 7 bankruptcy. The alternative is to possibly file for chapter 13 bankruptcy (where there is no Means Test you must pass in order to qualify).

If you are unsure whether or not you pass the Means Test, you should contact an experienced bankruptcy attorney. Atlantis Law provides free bankruptcy consultations so that you can meet with a bankruptcy attorney, who will put you through the Means Test to see if you qualify to file for chapter 7 bankruptcy. Atlantis Law attorneys are very knowledgeable and skilled at helping our clients pass the Means Test, even if your income is higher than the state median. We know the correct expenses to use to get you to qualify for a chapter 7 bankruptcy. Contact us today to schedule a free consultation.

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