What is a “Means Test” in Bankruptcy?


Bankruptcy Means Test | Bankruptcy Eligibility

by Max Gunderson

The new Bankruptcy Law of 2005 changed many of the Arizona bankruptcy laws.  One of the most significant provisions of the new bankruptcy law of 2005 is the introduction of a “means test.” So, what is the means test? The means test is used to determine whether or not a person is eligible to file for a Chapter 7 bankruptcy. Under the new bankruptcy law, as of October 17, 2005, bankruptcy applicants who wish to file for Chapter 7 bankruptcy protection must meet certain eligibility requirements under a designed “means test.” Once you decide that you are going to file for bankruptcy, you must take the means test and submit the results of the means test to the Bankruptcy Court.

One of the things that the new bankruptcy law passed in 2005 was designed to do was to prevent people with higher incomes from filing for Chapter 7 bankruptcy.  The “means test” checks your income in order to determine your eligibility to file for bankruptcy.  If your income is below the average for your state, you are then eligible to file for Chapter 7 bankruptcy. If your income is above the median for your particular state, you will not be allowed to file Chapter 7 except under very special circumstances.  The bankruptcy experts at the My AZ Lawyers can help you determine what chapter of bankruptcy best fits your financial situation?

If you are considering filing bankruptcy and your income is above the state average, the calculations for the means test become more complex.  The means test evaluates what you have for disposable income (the amount of money you have left over after paying your expenses).  If your disposable income is too high, the Bankruptcy Court may decide that you can pay off at least some of your debts; this means that you will have to file a Chapter 13 bankruptcy instead of a Chapter 7 bankruptcy.

No matter what the means test reveals, it is a good idea to hire a lawyer to help you with your bankruptcy.  Even if through the means test you qualify for filing a Chapter 7 bankruptcy, it may not be in your best interests to do so.  An experienced Mesa, Phoenix, Glendale, Tempe, Scottsdale, Gilbert, Peoria, or Tucson, Arizona bankruptcy lawyer can help you make the right decision when filing for chapter 7 bankruptcy or chapter 13 bankruptcy protection.  It is always a great idea to hire a bankruptcy lawyer if you plan on seeking bankruptcy protection in Arizona.  A Phoenix, Mesa, Glendale, and Tucson, Arizona bankruptcy lawyer, debt relief expert, or bankruptcy attorney will make sure the entire bankruptcy process is a successful one for you. Contact a qualified bankruptcy lawyer.

If you are looking for more information about:  The bankruptcy “Means Test”, Bankruptcy Eligibility, Repossession in Arizona, Debt Relief in Arizona, Chapter 13 Bankruptcy in Arizona, Chapter 7 Bankruptcy in Arizona, Arizona Bankruptcy Lawyers, Arizona Bankruptcy Attorneys, Repossession Deficiencies, Arizona Bankruptcy, Automatic Stay in Bankruptcy, or Affordable Bankruptcy Assistance.

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