Vance P. Truman, Attorney at Law
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Don't be afraid of the 'means test' for Chapter 7

One of the most frequent concerns that we hear from consumers who are overwhelmed with debt but frightened about the prospect of bankruptcy is, "I'm worried that I have too much money to qualify."

What they're really worried is that they won't pass the "means test" that's part of the Chapter 7 process. Essentially, the means test determines who can qualify for that particular form of debt relief -- and who can't. However, is it really that difficult to pass?

Not at all. And, even if you do fail the means test, that doesn't necessarily preclude you from filing bankruptcy -- albeit in a different form.

More than likely, you meet the means test automatically. In order to tell, you have to compare your family's monthly income with the median monthly income for a household of your size. That median figure is calculated differently for every state because the cost-of-living is so different from one area of the country to another. While figures haven't been provided yet for 2019, the most recent figures available from 2018 show that a single individual in Ohio would have to earn more than $48,438 per year, which is approximately $4,037 per month, before "failing" the means test. Anything less means that you automatically pass.

If you do fail the automatic test, you can still qualify for a Chapter 7 discharge. There are a number of qualifying deductions -- expenses that you can take from your income before applying the means test. Once those deductions are correctly applied, it will tell the court how much disposable income you actually have available to pay your creditors.

If all else fails, you also may have the option of filing for a Chapter 13 bankruptcy instead. Chapter 13 allows you to pay off your debts over several years, under court supervision. While not as quick as Chapter 7, it is a viable form of debt relief.

When applied correctly, many people do qualify for a Chapter 7 bankruptcy -- despite their income. It often takes an attorney's experienced guidance, however, to correctly determine your eligibility. Our office can review your information and help you better understand your options.

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