How Do You Know if You Qualify for Chapter 7?
Chapter seven Bankruptcy Means Examination
Chapter 7 bankruptcy is available to sure individuals who cannot pay their debts, such as credit card debt and past-due medical bills. If you qualify for Chapter 7 defalcation, yous may be able to receive a discharge for about of your debts. This means these debts are forgiven and creditors cannot continue to demand this coin from you.
However, at that place are specific requirements y'all must run into to belch debt in a Chapter seven defalcation filing. To determine whether you are eligible, Congress established a "means test" where a debtor's debt is primarily consumer in nature. The bankruptcy means test determines whether your income (based on the 6 months prior to the filing) and expenses (some actual and some standardized) makes you lot presumptively ineligible for a Chapter vii.
The board-certified Chapter 7 bankruptcy lawyers of the Sasser Law Firm have more than than 20 years of feel helping North Carolina residents and businesses navigate and overcome fiscal setbacks. Contact us today for a free discussion about Chapter 7 bankruptcy or another option that is right for yous.
How to Complete the Chapter 7 Defalcation Means Test
Means tests were added to bankruptcy proceedings in 2005 to prevent abuse of a system that allows individuals and businesses to work their way out of crushing debt obligations
For Chapter 7 personal defalcation, which is a liquidation of assets to pay debts, the question of means focuses on whether you take enough income to pay some amount of money toward your debts. If you cannot, many of your debts can be discharged, which means you no longer take a legal obligation to pay them.
The offset question to reply in the Affiliate 7 bankruptcy means test is whether your monthly income is more or less than the median income in North Carolina. This is calculated according to the size of your household.
If your current monthly income is less than the median income for a household of your size in North Carolina, you are presumptively eligible for bankruptcy under Chapter 7 of the bankruptcy lawmaking although at that place is still a chance your case can be dismissed based on abuse.
If your income is more than than the median income for a household of your size, the price of your living expenses may make you eligible for Affiliate seven defalcation. One time expenses are considered, the means test considers your left-over, disposable income.
Some of the expenses that may be considered include:
- Food and wearable
- Health care (out of pocket)
- Health and/or disability insurance premiums and/or wellness savings account contributions
- Childcare
- Necessary intendance and back up of an elderly, chronically ill, or disabled member of your household or member of your immediate family who is dependent on you lot.
- Mortgage or rent
- Household operating expenses and insurance
- Car loan or lease payments
- Vehicle operating costs
- Public transportation costs
- Court-ordered payments
- Education expenses for dependent children younger than 18, upwards to $170.83 per kid (a maximum adjusted periodically)
- Tuition for chore-related education or for services for a physically or mentally challenged dependent child if no similar public instruction is bachelor
Each expense is calculated according to the number of people in your household, and wellness care costs are calculated separately according to whether individuals in the household are younger than 65 years one-time or 65 or older. There are boosted caveats and weather throughout the "exam."
If what's left when you deduct allowable expenses from your income — your dispensable income — is more than than the median monthly income in the state, you fail the means test and are presumptively ineligible to take your debt discharged past filing for Chapter vii defalcation although you may withal qualify for a discharge based on a showing of "special circumstances."
To calculate the means test, y'all must submit the completed Affiliate 7 Statement of Your Current Monthly Income (Official Class 122A─1) and the Affiliate 7 Ways Examination Calculation form (Official Form 122A–2), which may remind you lot of tax forms.
If you lot are a disabled veteran whose debts mounted during a deployment, or a Reservist or member of the National Guard chosen to agile duty after 9/11, you may exist exempt from ways-testing. You would need to consummate the Statement of Exemption from Presumption of Abuse Under § 707(b)(2) (Official Form 122A─1Supp).
In addition to completing the monthly income and means exam forms, you may be required to submit documentation (e.g. paystubs and banking company statements) that reflect your income and expenses.
The North Carolina Median Income Standards for Affiliate 7 Defalcation Means Test
| Number of People in the Household | Median Income |
| 1 | $25,327 |
| ii | $33,022 |
| 3 | $36,035 |
| four | $44,471 |
| 5 | $48,971 |
| 6 | $53,471 |
| seven | $57,971 |
| 8 | $62,471 |
(Each additional person in the household adds $4,500)
Even if you pass the Affiliate 7 defalcation means test, in that location are additional considerations every bit to whether a Chapter 7 filing is correct for yous and your financial situation.
You Still Have Options if you lot Fail the Chapter 7 Means Test
Individuals who exercise not qualify for Chapter 7 bankruptcy may end upwardly filing under Affiliate eleven or Affiliate 13.
A Chapter thirteen bankruptcy allows individuals who accept a steady income to propose a plan to pay all or a portion of their debts. A program, which must be approved by the Defalcation Court, may stretch payments over three to v years.
The means test is based on your average income for the six months preceding your filing appointment. In some cases, a debtor may be able to delay their bankruptcy filing and, because circumstances modify, pass the Chapter seven means test at a later date.
A Sasser Law Firm bankruptcy attorney tin can assist you by explaining the pros and cons of Chapter 7 debt relief and its alternatives. If Chapter 7 is the solution for you, we can perform all necessary legal work for you.
How Tin can Our Northward Carolina Chapter 7 Bankruptcy Lawyers Help You?
The empathetic bankruptcy attorneys of the Sasser Law House have dedicated our careers to helping individuals, families, and businesses start over financially. We are board-certified defalcation lawyers who favor a straightforward approach to evaluating cases, and who volition tell you the options that volition suit your situation best, including steps you could take to avoid bankruptcy.
The Sasser Police Firm has helped more than 8,500 people and businesses file for bankruptcy in Raleigh. Our N Carolina Bankruptcy attorneys work one-on-i with clients, and we act promptly and with consideration for time-sensitive and complex cases.
Contact us today to discuss your case in a gratis consultation with our Raleigh bankruptcy lawyers. We piece of work with clients from throughout North Carolina, including in Wake, Harnett, Johnston, Durham, Orange, Granville, Vance, Franklin, Warren, Nash, Lee, Chatham, and Moore counties. Call at present.
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Source: https://www.sasserbankruptcy.com/chapter-7/means-test-eligibility/
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