Means Test

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What Is the Means Test?

Understanding What the Means Test Analyzes

When debtors are facing financial hardship, they may want to consider filing for bankruptcy. In order to file for bankruptcy, however, the debtor must pass a bankruptcy "means test." The means test specifically assesses a debtor's financial situation and is designed to limit who can or cannot file for Chapter 7 bankruptcy so that people do not take advantage of the system.

The results of a means test will determine whether or not you are eligible for filing for Chapter 7 bankruptcy based on the following factors:

  • Your monthly expenses
  • Your current monthly income
  • Your monthly disposable income, which is calculated by deducting your monthly expenses from your current monthly income

Essentially, the higher your monthly disposable income is compared to your debt, the more unlikely it is that you will be eligible to file for bankruptcy. If you pass the means test, you will be considered eligible to file for Chapter 7 bankruptcy. At the Schwilm Law Firm, PLLC, however, our Charlotte bankruptcy lawyer and our team strongly believe that just because you are eligible for Chapter 7 does not mean that you should go through with the process. Sometimes, bankruptcy can produce just a temporary resolution for a greater, more substantial problem. We can carefully review your situation and provide comprehensive legal guidance.

What happens if I don't pass the means test?

If you do not pass the means test, do not lose hope. Assuming that your situation is helpless is one of the greatest mistakes that you can make. At Schwilm Law Firm, PLLC we know your rights during this time. You are afforded many protections under bankruptcy laws, including the ability to choose from a variety of bankruptcy alternatives to achieve debt relief.

Because the means test only determines your eligibility for Chapter 7, you will have the option to consider filing for Chapter 13 bankruptcy. Chapter 13 allows you to pay back your debts in affordable payments over a set period of time. This alternative can be ideal for many people who are earnest in their efforts to settle their debts once and for all.

Call Our Charlotte Bankruptcy Attorney to Learn About Your Options

If you are considering filing for bankruptcy, do not go another moment without first speaking with a knowledgeable attorney. We have spent more than 15 years helping numerous individuals in Charlotte regain power and confidence to take control of their finances. When you want to recover from debt and begin to experience the joy of financial stability, trust us to help you through every step of the process.

Contact our BBB A+ Rated law firm to get started!