What Is the Process for Determining Whether You Qualify to Permanently Discharge Debts?
Under the American bankruptcy laws, when you file a personal bankruptcy petition, you may be able to permanently discharge debts through Chapter 7 or you may be limited to restructuring your debt under Chapter 13. To be eligible to permanently rid yourself of qualified debts, you must submit to what is commonly referred to as the “means test,” demonstrating to the bankruptcy court that you lack the resources and ability to repay your creditors over a three-tofive-year period. How does the means test work? How will you know if you qualify?
The Two-Step Process for Qualifying for Chapter 7 Bankruptcy
The means test is potentially a two-step process. First, the test will look at your income to determine whether it is below the Chapter 7 income threshold. This is the median income in the state, based on the size of your household. If your income over the last six months is below the state’s median income for your size of household and there’s no reasonable expectation that your income will increase, you automatically qualify and don’t have to worry about the second step.
You may still qualify for Chapter 7, though, even if your income exceeds the median income in your state. However, you will need to document for the bankruptcy court how much of your income went to “necessaries,” such as rent/mortgage payments, groceries, medical bills and clothing. This will allow the court to determine the extent of your discretionary income. If your “disposable” income is low enough, you will be allowed to file for permanent discharge of debt under Chapter 7.
Contact an Experienced Rockwall, TX Bankruptcy Attorney
At the Law Offices of Carrie Weir, all potential clients are entitled to a free initial consultation. To arrange an appointment to discuss your rights and options an in bankruptcy, contact my office online or call 972-772-3083. I handle Texas personal bankruptcy filings in Kaufman County, Rockwall County, Collin County, Dallas County, Hunt County and the surrounding counties.
