Means Test

Means Test is used in order to know your credibility and legibility for Chapter 7 and/or Chapter 13 bankruptcy.

 

Not too long ago, a new bankruptcy law took effect on October 17, 2005. And definitely a lot of people are getting anxious and confused about it. Having new set of rules and a new means test requirement is difficult to struggling homeowners and families.

 

That is why this article is made and formulated to explain how to prepare documents, materials, and other requirements to meet the means test.

 

As a rule, the bankruptcy means test determines whether your income is low or enough already to file bankruptcy.

 

People have to fully understand this requirement before they apply for Chapter 7 or Chapter 13. In order for the debtors to do this, they are required to complete first the Official Bankruptcy Form 22A or 22C which is the Statement of Current Monthly Income and Calculations.

 

The bankruptcy form 22A is for the Chapter 7 debtors to complete while the bankruptcy form 22C is for the Chapter 13 to finish. These are generally for the means test calculations.

 

A debtor must provide and put all their income and expenses information into the said bankruptcy form. Through means test, debtor's income and how much they have to pay for their debt are calculated based on the information and personal records written in the bankruptcy form.

 

Always remember that those bankruptcy filers with business debts do not need to take the means test. Filers with primarily consumer debts are the ones subject to the means test. The goal of the said test is also to limit the use of chapter 7 bankruptcy.

 

It is un likely that you be allowed to file Chapter 7 if you have a higher disposable income. In most cases, disposable income pertains to your current monthly income. In other words, it is the income received by the debtor (other than child support payments, foster care payments, or disability payments for a dependent child made in accordance with applicable non-bankruptcy law to the extent reasonably necessary to be expended for such child) less amounts reasonably necessary to be expended.

 

In simple terms, disposable income is the money you have after you have meet your reasonble living expenses (paid your bills).

 

Generally, the means test is used to determine the sources of your income if they fall within a certain level. Also, there is what bankruptcy law referes to as income disregards. It pertains to the income not taken into account. This sometimes happens when an income from a certain and specific source is not take into account.

 

The means test for filing a bankruptcy could be a complex calculation. We can make it easier for you to figure out what how the means test will be applied in your situation.

 

So if you have some questions regarding bankruptcy and or the means test and how to meet its requirements, please contact us for a free consultation.