If you are suffering from financial strain because of medical or credit card debt, then you may need to consider filing for bankruptcy. Bankruptcy is a process that helps resolve overwhelming debts. The most common form of debt relief is Chapter 7 bankruptcy. In a matter of months, your debts can be cleared when you file for Chapter 7 bankruptcy.
However, you must take a means test when filing for bankruptcy. A means test determines who is eligible for Chapter 7 bankruptcy. Here is what you should know:
Who is eligible for Chapter 7 bankruptcy?
Some people who are in debt are still able to make partial or full payments. However, others do not earn enough to pay off their debts. To determine who can and cannot pay off their debts, bankruptcy filers must take a means test. A means test evaluates a filer’s income and basic necessities and compares them to the median cost for their community.
When filing for Chapter 7 bankruptcy, you must file Form 122A-1, including six months of income prior to the filing. Your income is compared to the state’s median income for your household size. If your income is less than the state’s median income, then you may be eligible for Chapter 7 bankruptcy. However, if your income exceeds the state’s median income, then you may need to consider alternative bankruptcy options such as Chapter 13.
You can reach out for professional legal guidance when filing for bankruptcy. Knowing more about the bankruptcy process can help ensure a swift filing.