Friday, August 16, 2013
Boise Bankruptcy Attorney - Chapter 7 and Chapter 13 - 208-472-2383
Bankruptcy and the Means Test
While filing for bankruptcy is not overly difficult, there are a number of important things to keep in mind. Before you can file you must run what is known as the “means test”. The means test determines which chapter of bankruptcy you will file under.
The means test looks at your income. If you exceed a statutory threshold you are forced to file a Chapter 13 bankruptcy. However, if after running the initial income test your income exceed the “means”, you aren’t necessarily out of luck. The means test also looks at certain expenses that will potentially reduce your countable income.
The means test is several pages long, but it, in and of itself, should not be intimidating. After you go through the first several questions, you will know if your income is too great to file for Chapter 7 bankruptcy. If your income is not above the statutory level you need go no further.
Bankruptcy and Military Service
There are some interesting exceptions in the means test as well. For example, if you are an active member of the military and you incurred the majority of your debt while on active duty, you qualify for a Chapter 7 automatically. There are also exceptions for members of the Guard.
If you don’t qualify for a Chapter 7 Bankruptcy you can explore a Chapter 13. Some people are concerned about going that route because they want all their debts discharged. However, a Chapter 13 might actually work better in some cases. In it you reaffirm debts and create a repayment plan. It allows you to save your house and other items if you reaffirm. And while not all of your debts are discharged if they are unsecured they will be.
Another consideration about filing out the means test is family size. The more people in your family, the greater the income you can have and stay within the means. Obviously, you would count your spouse and your children. This can get tricky if you are in the process of divorce, or you have already gone through a divorce. Can you count the kids if you only have shared custody? What if you are engaged to be married? Do you consider your fiancé part of your household? These are all questions your Boise Bankruptcy Attorney can discuss with you to help you decide which bankruptcy route is best for you.
If you want to speak to an affordable and experienced Boise Bankruptcy Attorney, please give us a call at 208-472-2383. You will be glad you did.