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Understanding the Chapter 7 means test

If you are one of the many in Rossville that is (for whatever reason) struggling with debt, then bankruptcy protection may be your best bet at halting the harassment you are having to deal with from creditors and providing you with a fresh start. A Chapter 7 bankruptcy allows you to discharge many eligible debts and re-establish yourself on firm financial ground. It is for this reason that Chapter 7 is typically the most requested filing option for those considering a personal bankruptcy. However, many clients come to is here at The Harriss and Hartnab Law Firm, P.C. expecting to file for Chapter 7, only to be surprised to learn that they first must pass a means test.

The Chapter 7 means test is in place to keep people from abusing the protection that this type of case offers. It determines the criteria for whether you qualify to file for Chapter 7 or need to consider other options (such as Chapter 13). The first step in the means is to determine your current monthly income. That is done by taking your average monthly income from the previous five years, and then subtracting your monthly expenses (e.g., your mortgage payment, utility costs). This gives your disposable income, or the money you have to repay your debts.

If your disposable income is less than that of the median for a household of your size in Georgia, you pass. If it is above that, then it cannot exceed certain amounts established by the federal government. According to the website for the United States Courts, those current amounts are $12,850 or 25 percent of your nonpriority unsecured debts.

You can discover more information about your eligibility for bankruptcy protection by continuing to explore our site.