The means test is a tool used by the government to keep wealthy debtors from filing for Chapter 7 bankruptcy. Added to the Bankruptcy Code as part of the sweeping 2005 law changes, the means test is another hurdle in the process of obtaining debt relief. On this page, we will explore some of the key features of the means test. For information on your rights in regard to the means test, it is important to consult with an experienced Arizona bankruptcy lawyer.
To discuss your specific circumstances with Arizona bankruptcy attorney Stephen Trezza, contact us to schedule a consultation.
The Chapter 7 Bankruptcy Means Test
If you are seeking debt relief through Chapter 7 bankruptcy, your assets and income must be below a certain amount. If your income is below Arizona's median income, you do not have to take the means test at all and you automatically qualify for Chapter 7.
If, however, your income is greater than the state's median income, you may still qualify for Chapter 7, but you will have to take the means test. What does the means test entail? In taking the means test, you must answer questions such as:
- What is your income over the last six months?
- Do you have enough disposable income to pay your debts?
- What are your monthly expenses?
- What are your assets?
- What are your debts?
- How many dependents do you have?
- Are you disabled?
- Are you a veteran?
If you do not pass the means test, you may still file for Chapter 13 bankruptcy, a repayment plan that offers you protection from creditors while allowing you to repay your debts over a period of three or five years.
How Can We Help?
The means test is fairly complex, and a 50-dollar swing in either direction can mean the difference between qualifying for Chapter 7 and not qualifying. If you are close to qualifying, there may be steps you can take that would help you pass the means test and qualify for Chapter 7.
This could be as simple as buying a home alarm, or expanding your life insurance coverage. Any expenses you report, as long as they have a legitimate business purpose, can be reported and may help you cross the threshold. Our attorneys can review your entire financial situation to determine if there are any steps you can take that will help you in regard to passing the means test and qualifying for Chapter 7 bankruptcy.
Contact Us to Learn More About the Means Test in Arizona
Every case is different, so it is important to discuss your situation with a Phoenix bankruptcy lawyer before making a decision. Contact us to discuss your options. We represent clients from Phoenix, Tucson and throughout Arizona.
