Relieve Yourself From Debt Through Liquidation Bankruptcy
Consult with our bankruptcy lawyer at Flynn Law Firm in Cabot, Arkansas to learn how you can clear your debts by filing a Chapter 7 Bankruptcy petition. You can count on us to provide you with sound advice for your specific legal needs.
A Simple Definition Of The Means Test
This is a way to determine if an individual or small business filing for liquidation bankruptcy is not abusing the Bankruptcy Code. The means test formula was designed to filter out those who can pay off their debts, which makes them ineligible for the application. You can make the necessary calculations yourself for the trial or use a Chapter 7 means test online calculator such as Legalconsumer.com.
A Few Factors To Determine Your Eligibility
Your Household Income
Having a monthly income that falls under the state median makes you qualified to file for Chapter 7 bankruptcy. If you go over this number, you have to calculate your disposable income to test your eligibility.
Your Disposable Income
The means test gets more complex for individuals with a household income that exceeds the state median. Your capability to pay off your debts will be taken into consideration in this situation. The amount of money you have left after paying your essential monthly expenses will come into play. If your disposable income goes over the qualifying percentage, you fail the means test.
Alternatives to Chapter 7 Bankruptcy
Failing the Chapter 7 means test does not denote that you can never file for bankruptcy. This just signifies that you are limited to other options, like Chapter 13 bankruptcy. You need to consult with a licensed lawyer to learn the best legal action for your financial future.
What Is A Chapter 7 Bankruptcy And Who Generally Would Qualify?
In a chapter 7 bankruptcy, or liquidation bankruptcy, any assets you own that are not exempt would be sold by the chapter 7 trustee and used to pay your creditors. However, in practice, very few people have non-exempt assets. This is what is called a No Asset chapter 7 case. There are no assets being disbursed and the end result is the discharge of all debts except those excluded from discharge, such as student loans, most taxes, child support arrearage, and judgments related to driving and car accidents.
The people most likely to qualify for chapter 7 bankruptcy are those whose income is about the same as their living expenses or even less than their expenses. If someone can save money each month, you probably will not qualify for a chapter 7 bankruptcy.
What Then Is A Chapter 13 Bankruptcy And Who Is This The Best Option For?
Chapter 13 bankruptcy is one in which we figure out how much a person can afford to pay each month toward their debts. Then we decide how that amount will be distributed to creditors. Deciding which creditors are paid through the chapter 13 bankruptcy is complex and depends on the individual’s circumstances.
For more information Bankruptcy Law in Arkansas, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (501) 819-8090 today.
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