When most people decide to seek a discharge of their otherwise insurmountable unsecured debt via the Chapter 7 bankruptcy process, they typically want to get the process started as quickly as possible so that they can put the past behind them and start anew on firmer financial footing.
As understandable as this is, it’s important for people in this situation to understand that before they can seek debt forgiveness via Chapter 7 bankruptcy, they must first pass what is known as the bankruptcy means test.
What exactly is the bankruptcy means test?
In general, the bankruptcy means test is an inquiry designed to determine whether you, the filer, have sufficient disposable income to direct toward paying off your debts. The test consists of two parts, and takes such factors as income, expenses and even family size into consideration.
Is the bankruptcy means test difficult to pass?
The reality is that even though the bankruptcy means test is designed to limit the number of people who can seek debt relief via Chapter 7, the majority of debtors end up qualifying.
Indeed, statistics from the Executive Office for U.S. Trustees, which oversees bankruptcy administration, indicated that in 2013 alone, 88 percent of prospective Chapter 7 filers passed the first part of the test.
What happens if I don’t pass the bankruptcy means test?
The bankruptcy means test is designed in such a manner that if a filer somehow fails the first stage — which we’ll examine in our next post — they can still qualify for Chapter 7 bankruptcy by passing the second stage.
Furthermore, it’s important for people to understand that in the event they somehow fail both stages of the bankruptcy means test, they can still seek debt relief via Chapter 13 bankruptcy.
If you would like to learn more about the bankruptcy means test or have questions about the Chapter 7 process in general, consider speaking with a skilled legal professional.