About Me

Understanding Bankruptcy Cases and Outcomes

Hello, my name is Quianna Ridalgo. I enjoy talking to others about bankruptcy case outcomes. Court officials handle each type of debt, from credit cards to home loans, differently. Debtors must carefully prepare themselves for the court proceedings to cope with the outcome appropriately. The way creditors handle the discharged debt also interests me. Bankruptcy attorneys assist their clients with each step of the bankruptcy process from filing paperwork to meeting with creditors. Debtors and creditors both receive counsel that helps them move forward appropriately at every point in the case. The information I share on my site may help you learn about everyone's role in these complex cases. Feel free to come by anytime to learn more information about this interesting subject.

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Understanding Bankruptcy Cases and Outcomes

Means To An End: What To Know About Bankruptcy Means Testing

by Loretta Harris

When you are considering a bankruptcy filing, you should take into consideration all facets of this legal act and have a full understanding of what is involved. Moreover, a chapter 7 bankruptcy filing will impact your ability to get more credit for many years, so it should not be an impulsive move. In most cases, financial hardship drives most to make that big decision, and there are few things more efficient than a bankruptcy filing to eliminate debt and put an end to both debt collection efforts and lessen the potential for losing property. There is a lot more to it, however, and you should make it a priority to determine whether or not you are even qualified to file. Read on to learn more about how your income could play a large role in your bankruptcy filing.

Repeat Filers and the Means to Pay

In times past, anyone and everyone who wanted to could file for bankruptcy and make a fresh start of their financial mess. In recent times, however, the bankruptcy code has been updated to prevent frequent and well-off filers from filing time after time and to impose required educational and budgetary provisions to be accomplished.

Income Limits

One of the main gates that filers must now pass through is known as the "means" test. In this instance, the term means refers to the filers income that could be available to pay some or all of the debt included in the bankruptcy. This means that if you have a high income, you may be barred from filing for a chapter 7 bankruptcy. After all, this rule makes sense when you consider that when you "declare" bankruptcy you are attesting to the fact that you do not have enough money to pay your debts in a timely manner. It's very important for filers to understand that the income allowed is based on your state's particular median income, so the income allowed will be slightly different in each state.

The Means Test

When you receive your bankruptcy paperwork package, among the stack of forms will the Form 22-A. This is the actual means test, and it asks for information about your last six months of income. Additionally, you will be asked about your expenses, or your debt obligations for each month. The means test, then, is quite similar to a budget. You must take great care to list your debt obligations as accurately as possible, since you may be allowed to deduct certain expenses from your income for calculation purposes. If your income is over the limit, speak to your bankruptcy attorney to see if you have listed your large debt obligations, like your mortgage or high medical bills, accurately. You can also utilize an online model to get an idea of what the means test is like.

Speak to your bankruptcy attorney to learn more about this means test and consider filing a chapter 13, which has no income limits, if your debt is still too high after deduction. For more information, contact a professional such as Jeffrey S. Arnold, Attorney at Law, P.C