Bankruptcy is a legal process that offers debtors an opportunity to eliminate some or all their outstanding debts. When a Maryland resident is ready to consider their bankruptcy options, they can benefit from speaking with a knowledgeable legal professional who offers bankruptcy as part of their practice. Chapter 7 bankruptcy is one of the bankruptcy paths an individual can choose to address their financial situation.
To qualify for Chapter 7 bankruptcy, an individual generally must pass the means test. This post will discuss the requirements of the means test. It should not be read as legal advice. All information contained herein is general and should be discussed with a knowledgeable bankruptcy attorney.
The median income evaluation
One way that a debtor may satisfy the means test of Chapter 7 bankruptcy is to have a sufficiently low income. If the debtor’s monthly income for six months prior to filing is less than or equal to the median income for the state in which they live, they satisfy the means test. If a debtor’s income exceeds the median for the state, they must qualify for Chapter 7 bankruptcy another way.
Qualification based on expenses
It is possible for a person with a higher income to qualify for Chapter 7 bankruptcy if they can show that their expenses do not allow for sufficient disposable income to pay off their debts. If an individual has necessary expenses that exhaust their disposable income, their lack of extra money to pay off their debts may qualify them for bankruptcy protections under Chapter seven.
If a debtor does not qualify for Chapter 7 bankruptcy based on these requirements, they should speak to their trusted bankruptcy attorney about exceptions. There are additional ways to work around the means test to use Chapter 7 bankruptcy do alleviate one’s financial burdens. Individual legal counseling from a knowledgeable legal professional can help an individual choose the right bankruptcy path for them.