What is a Bankruptcy “Means Test”
One reason people choose to hire a bankruptcy lawyer is because the process to file is complicated and can be quite confusing. For instance, not everyone qualifies to file Chapter 7 bankruptcy as certain criteria must be met. The “Means Test” determines if you are eligible to file for Chapter 7 bankruptcy. Your bankruptcy attorney can explain this further, but here is a summary:
The first part of the Means Test examines your household income and compares it to the median income for a household of your size in South Carolina. If your household income is below the median income, you will automatically qualify for Chapter 7 bankruptcy. If your household income is above the median income, you will need to complete the second part of the Means Test, which looks at your disposable income.
Disposable income for purpose of the Means Test is defined as your monthly income after subtracting certain allowed expenses, such as taxes and child care costs. If your disposable income is less than $100 per month, you will qualify for Chapter 7 bankruptcy. To complete the second part of the Means Test, you will need to provide your bankruptcy lawyer with the following:
- Your most recent federal tax return
- Your pay stubs from the last six months
- A list of all of your debts
- A list of all of your assets
- Any other documents requested by your bankruptcy attorney.
Our next article will answer some common questions about the Means Test.
If you are considering bankruptcy, Charleston residents and those in surrounding areas trust the bankruptcy lawyer at the Drose Law Firm to help guide them through the process. Some law firms have multiple practice areas (i.e., auto accidents, malpractice, criminal, civil, etc.) At Drose Law Firm, our bankruptcy attorney only handles debt resolution and has been doing so for more than three decades. Give us a call to schedule a consultation with our bankruptcy lawyer today.