Do You Qualify under the Chapter 7 Means Test?

September 11, 2012

If you or your family are struggling under the weight of insupportable financial obligations, you may need to consider your options under the Bankruptcy Code. While the Code offers consumer debtors two options for bankruptcy – known as Chapter 7 and Chapter 13 – only certain debtors qualify for Chapter 7.

 

Which is better: Chapter 7 or Chapter 13? In many ways, Chapter 7, also known as a straight bankruptcy, is easier to manage. In general, your non-exempt assets are liquidated, used to pay off your outstanding debts, and your remaining obligations discharged. While the initial shock of losing some cherished possessions is disquieting for some debtors, many appreciate the cut-and-dried cleanliness of a straight bankruptcy.

 

Chapter 13, also known as a wage earner plan, lets you pay off a portion of your debts in a court-approved, trustee-supervised process that frequently protects your assets, even non-exempt possessions. However, a Chapter 13 restructuring of your debts can extend not only your debt payments, but your financial and personal stress for up to 5 years.

 

How do you determine whether a Chapter 7 or Chapter 13 bankruptcy is right for you? The first question is whether you qualify for Chapter 7. Your qualifications are determined by a process known as the means test, a standard articulated under the Bankruptcy Code. In general, a bankruptcy court will compare your income to the average income in your county. If you income is less than the average, you may declare Chapter 7. If not, Chapter 13 may be your only option.

 

Ready to find out the answer to all of your bankruptcy and financial restructuring questions? The attorneys at Fears Nachawati are prepared to give you the advice and perspective you need. Contact our professionals today.

More Blog Posts

CONTACT US

Use the form below to send us a note, call us at 214.890.0711 or chat with us live. We are eager to help with all your legal needs. Please keep in mind that any unsolicited information sent through our website cannot be treated as confidential. Contacting us through this site does not create a representation relationship with Fears Nachawati.

Inquiry Type

  • General
  • Personal Injury
  • Immigration
  • Bankruptcy
  • Drug Litigation
  • Family Law

Locations

With offices in Texas, Florida and Colorado and attorneys licensed in Texas, Florida, Colorado, Arkansas and Oklahoma, Fears Nachawati is dedicated to attaining the best possible solutions for our clients’ business and personal needs. We strive to be professionals who are creative, empathetic and reliable.

All Areas Served

We Can Help

Contact Fears Nachawati today

Free Consulation

Live Chat (Online Now)