Avoid These Common Mistakes When Taking the Chapter 7 Means Test
June 10, 2020 By: Carrie Weir
Let an Experienced Bankruptcy Attorney Guide You Through the Process
Under American bankruptcy law, individuals must submit to a “means test” to determine eligibility for the permanent discharge of debt under Chapter 7. The means test establishes whether you have the resources to repay your creditors over a three-to-five-year period. If you do, you may not file under Chapter 7 and must reorganize your debts under Chapter 13. The means test is not simple and, unfortunately, many debtors who try to work through its provisions on their own make common mistakes
- Incorrectly submitting to the means test to disqualify themselves—Though the means test generally applies to all consumer bankruptcy petitions, there are a couple exceptions. Disabled veterans and active duty military reserve personnel may be able to bypass the means test and file for Chapter 7. In addition, if you have both business and consumer debt and your business debt is greater than your personal debt, you don’t haveto take the means test.
- Submitting documentation that is inconsistent—Make certain the income listed on the means test form matches the documentation you provide as support.
- Using the wrong household size on the means test form—For purposes of the means test, the allowable income varies based on household size. The definition of “household” can vary from state to state. Some states allow you to declare anyone living in the household, while others permit you to include only those who are financially dependent on you.
- Listing unpaid child support as income—Child support is only income for the purposes of the means test if you actually receive it.
- Deduction errors—Many debtors who attempt to complete the means test on their own either take deductions that are not allowed—such as retirement account contributions—or fail to take deductions that are permissible, including child support payments.
With the fundamental complexity of the means test, it’s always in your best interest to hire an experienced bankruptcy attorney to protect your rights
Contact an Experienced Rockwall, Texas, Bankruptcy Attorney
At the Law Offices of Carrie Weir, all potential clients are entitled to a free initial consultation. I am currently communicating with clients by phone, text message, and videoconference. To arrange an appointment, contact my office online or call 972-772-3083. I handle Texas personal bankruptcy filings in Rockwall County, Collin County, Dallas County, Hunt County, and the surrounding counties